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Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017

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8301 revised

2016-2017

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

 

 

Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017

 

 

( 1 )     Schedule  1 , page 3 (before line 5) , before item  1 , insert:

1A  Subsection 10(1) (at the end of the definition of enhanced trustee obligations )

 Add:

             ; and (c)  for choice products—the obligations imposed by:

                              (i)  covenants referred to in section 52, as enhanced by the obligations imposed under section 29VN; and

                             (ii)  covenants prescribed under section 54A that are specified in the regulation s as forming part of the enhanced trustee obligations for choice products.

1B  Division 6 of Part 2C (heading)

Repeal the heading, substitute:

Division 6 Trustee obligations relating to MySuper products and choice products

1C  Section 29VN (heading)

Repeal the heading, substitute:

29VN   Additional obligations of a trustee in relation to MySuper products and choice products

1C  Section 29VN

After “MySuper product” (first occurring), insert “or a choice product”.

1D  Paragraph 29VN(a)

Repeal the paragraph, substitute:

                     (a)  promote the financial interests of the beneficiaries of the fund who hold the MySuper product or choice product, in particular by giving priority to the returns to those beneficiaries (after the deduction of fees, costs and taxes); and

[applying obligations to choice products; net returns]

( 2 )     Schedule  1 , item  2 , page 3 (line 11) , after “the MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 3 )     Schedule  1 , item  2 , page 3 (lines 14 to 16) , omit subparagraph  29VN(1) ( b )( ii ), substitute:

                             (ii)  if the product held is a MySuper product—a comparison of the MySuper product with other MySuper products, based on the factors mentioned in subsection (3); and

                            (iii)  if the product held is a choice product—a comparison of the choice product with other choice products, based on the factors mentioned in subsection (3A); and

[applying obligations to choice products]

( 4 )     Schedule  1 , page 3 (after line 16) , after item  2 , insert:

2A  Paragraphs 29VN(c) and (d)

After “MySuper product” (wherever occurring), insert “or choice product”.

[applying obligations to choice products]

( 5 )     Schedule  1 , item  3 , page 3 (before line 22) , before paragraph  29VN ( 2 )( a ), insert:

                    (aa)  whether the net returns that the trustee reasonably expects to be received by the beneficiaries of the fund are the most favourable for those beneficiaries that could be achieved by the trustee; and

[net returns]

( 6 )     Schedule  1 , item  3 , page 3 (line 20) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 7 )     Schedule  1 , item  3 , page 3 (line 23) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 8 )     Schedule  1 , item  3 , page 3 (line 24) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 9 )     Schedule  1 , item  3 , page 3 (line 27) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 10 )   Schedule  1 , item  3 , page 3 (line 30) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 11 )   Schedule  1 , item  3 , page 3 (line 33) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 12 )   Schedule  1 , item  3 , page 4 (line 2) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 13 )   Schedule  1 , item  3 , page 4 (line 6) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 14 )   Schedule  1 , item  3 , page 4 (line 11) , after “ MySuper product ”, insert “ or choice product ”.

[applying obligations to choice products]

( 15 )   Schedule  1 , item  3 , page 4 (after line 22) , after subsection  29VN ( 3 ), insert:

          (3A)  In comparing the choice product with other choice products, the trustees must compare each of the following:

                     (a)  the fees and costs that affect the return to the beneficiaries holding the choice products;

                     (b)  the return target for the choice products;

                     (c)  the return for the choice products;

                     (d)  the level of investment risk for the choice products;

                     (e)  any other matter prescribed for the purposes of this paragraph.

[applying obligations to choice products]

(1 6 )   Schedule  1 , item  3 , page 4 (after line 33) , at the end of subsection  29VN ( 4 ), add:

             ; and (e)  standards to be applied by trustees in comparing a choice product with other choice products, based on the factors mentioned in subsection (3A); and

                      (f)  methodology to be used by trustees in comparing a choice product with other choice products, based on factors mentioned in subsection (3A).

[applying obligations to choice products]

( 17)    Schedule  1 , page 5 (after line 8) , after item  3 , insert:

4  Section 29VO (heading)

Repeal the heading, substitute:

29VO   Additional obligations of a director of a corporate trustee in relation to MySuper products or choice products

5  Subsection 29VO(1)

After “MySuper product”, insert “or choice product”.

[applying obligations to choice products]

( 18 )   Schedule  2 , page 6 (before line 5) , before item  1 , insert:

1A  After subsection 29D(1)(h)

Insert:

                      (i)  APRA has no reason to believe that:

                              (i)  where the applicant is a body corporate—the body corporate; or

                             (ii)  where the applicant is made up of a group of individual trustees—each member of the group;

                            may fail to comply with the enhanced trustee obligations for MySuper products or choice products; and

                      (j)  where the applicant is a body corporate—APRA has no reason to believe that the directors of the body corporate may fail to comply with the enhanced director obligations for MySuper products; and

                     (k)  APRA has no reason to believe that:

                              (i)  where the applicant is a body corporate—the body corporate; or

                             (ii)  where the applicant is made up of a group of individual trustees—any of those individual trustees;

                            may fail to comply with the general fees rules and the fees rules in relation to MySuper products; and

                      (l)  APRA has no reason to believe that:

                              (i)  where the applicant is a body corporate—the body corporate; or

                             (ii)  where the applicant is made up of a group of individual trustees—any of those individual trustees;

                            may contravene section 29W, 29WA or 29WB.

1B  At the end of subsection 29G(2)

Add:

                     (g)  APRA has reason to believe that:

                              (i)  where the RSE licensee is a body corporate—the RSE licensee; or

                             (ii)  where the RSE licensee is made up of a group of individual trustees—any of those individual trustees;

                            may not comply with the enhanced trustee obligations for MySuper products or choice products (whether because of a previous failure to do so, or for any other reason); or

                     (h)  where the RSE licensee is a body corporate—APRA has reason to believe that the directors of the RSE licensee may not comply with the enhanced director obligations for MySuper products (whether because of a previous failure to do so, or for any other reason); or

                      (i)  APRA has reason to believe that:

                              (i)  where the RSE licensee is a body corporate—the RSE licensee; or

                             (ii)  where the RSE licensee is made up of a group of individual trustees—any of those individual trustees;

                            may not comply with the general fees rules and the fees rules in relation to MySuper products (whether because of a previous failure to do so, or for any other reason); or

                      (j)  APRA has reason to believe that:

                              (i)  where the RSE licensee is a body corporate—the RSE licensee; or

                             (ii)  where the RSE licensee is made up of a group of individual trustees—any of those individual trustees;

                            may contravene section 29W, 29WA or 29WB (whether because of a previous contravention of that section, or for any other reason).

[granting or cancelling RSE licences]

( 19 )   Schedule  5 , page 22 (after line 5) , after item  1 , insert:

1A  Subsection 10(1) (definition of connected entity )

Repeal the definition, substitute:

connected entity , in relation to an RSE licensee of a registrable superannuation entity, means:

                     (a)  a subsidiary of the RSE licensee (where the RSE licensee is a body corporate); or

                     (b)  a related body corporate of the RSE licensee; or

                     (c)  an entity that has a controlling stake in the RSE licensee including, where the RSE licensee is a body corporate, a related entity of the body corporate (within the meaning of the Corporations Act 2001 ); or

                     (d)  an entity that has practical control of the RSE licensee including, where the RSE licensee is a body corporate, a holding company of the body corporate (within the meaning of the Corporations Act 2001 ); or

                     (e)  any other entity of a kind prescribed by the regulations.

[connected entity]

( 20 )   Schedule  6 , item  3 , page 39 (lines 7 to 11) , omit the definition of investment option in subsection  1017BB(6) , substitute:

investment option , for a registrable superannuation entity, means:

                     (a)  an investment pool maintained within the entity; or

                     (b)  a financial product made availableto a member of the entity:

                              (i)  that is a managed investment scheme or other pooled investment; and

                             (ii)  in respect of which section 1012I A applies if there is, or will be, a regulated acquisition of the product (within the meaning of that section).

[investment option]