Australian financial services companies will not be charged a fee to have their MySuper applications processed by the Australian Prudential Regulation Authority (APRA).
In an updated version of APRA’s frequently asked questions documentation regarding the low-cost superannuation product, it said no charge was required for processing applications.
In terms of whether any subsidisation could be reached between MySuper products and choice products within a fund in respect to the fund’s operations, such as marketing or administration costs, APRA offered a two-pronged response.
“There can be no subsidisation between choice and MySuper products. However, there can be shared costs across a fund,” it said.
“Shared costs must be distributed fairly and reasonably between members holding different classes of beneficial interest in the fund.”
Asked whether a large-employer MySuper product could be ‘white-labelled’ for another non-associated large-employer product, APRA said that would not be allowed.
“No. A non-associated large employer will need to have its own authorised MySuper product or use a generic MySuper product,” it said.
In response to whether registrable superannuation entity (RSE) licensees could apply for a MySuper authorisation that involved the rebranding of an existing default investment option, APRA said they could.
“Yes. RSE licensees can apply for a MySuper authorisation that involves the rebranding of an existing default investment option,” it said.
“The RSE licensee will need to make sure that the current default option meets all of the criteria for a MySuper product.”
Questions were also asked in respect to insurance considerations in a MySuper product in the event of the death of a member.
APRA was asked whether an RSE licensee may choose to invest life insurance proceeds in a conservative investment option and whether this practice would be allowed for a member who had an interest in a MySuper product.
“Insurance proceeds are not a contribution in respect of the member,” it said.
“It is a payment by the insurer to the RSE licensee, which is then allocated by the RSE licensee to non-member beneficiary(ies).
“On that basis, the insurance proceeds can be held in an investment option (which may or may not be the MySuper product) in accordance with the RSE licensee’s predetermined policy.
“The member’s existing interest in the MySuper product should be retained in that product until distributed to the beneficiary(ies).”
The government has announced that MySuper products will replace all existing default funds by 1 July 2013.
From 1 January 2014, employers must make contributions for employees who have not made a choice of fund to a fund that offers a MySuper product in order to satisfy superannuation guarantee requirements.
