Home / Life Insurance / Treasury consults on draft regulations for super reforms
3 May 2021
Treasury has released for consultation the exposure draft regulations for a raft of proposed reforms to the superannuation system, including a so-called “stapling” measure that aims to save workers from paying unnecessary account fees and group insurance premiums.
The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 has had a second reading in Parliament in February and is scheduled to commence on July 1, subject to passage from lawmakers.
Treasury wants feedback on its plan to prescribe the definition of a “stapled fund”, including tie-breaker rules for determining which fund is to be an employee’s stapled fund where they have multiple existing accounts.
The proposed reforms are estimated to save Australian workers $17.9 billion over 10 years, Treasury says.
“This package builds on the Government’s legislated superannuation reforms which have included consolidating 3.3 million unintended multiple accounts worth $4.3 billion, capping fees on low balance accounts, banning exit fees and ensuring younger Australians do not pay unnecessary insurance premiums,” Treasurer Josh Frydenberg and Financial Services Minister Jane Hume said in a joint statement.
The Financial Services Council (FSC) says it continues to urge the Government to “prioritise” the stapling reform, a Hayne royal commission recommendation that is opposed by some including industry super fund Cbus.
If passed, the stapling measure means workers will only have one default super account even after they have switched employers.
“Until the much needed ‘stapling’ reforms are implemented the Government must take care to ensure superannuation funds cannot hide behind excessive administration fees on duplicate accounts that makes them appear cheaper than they are,” FSC CEO Sally Loane said.
Cbus has hit out at the “stapling” measure, saying it is concerned that the availability of insurance for workers in hazardous occupations is now at risk of being undermined with the proposed reform.
“If a construction worker is ‘stapled’ to a fund they joined at their first job, they could be paying for insurance that won’t cover them if they’re seriously injured,” CEO Justin Arter said in a statement last month.
“Many Cbus insurance claims are from workers in their first year on the building site when they are new to the industry and at higher risk.”
Treasury is also seeking submissions on the following:
Closing date for submissions is May 25.
Click here for more information.