AST GVT said Superannuation (objective) bill 2023 was introduced to AST PRL (on Nov. 16), in order to enshrine an objective of superannuation in legislation as part of AST GVT's agenda to strengthen and maximize the benefits of nation’s super system.
In addition, AST PRL issued an explanatory memorandum with respect to the bill.
Follows AST GVT Sep. 2023 proposal on legislating objective of super, see #183705.
Bill Overview
This bill enshrines the objective of super in legislation, requiring policy makers to assess future changes to super legislation for compatibility with this objective.
Bill defines objective of super as to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
AST GVT remarked that the objective will help ensure super delivers on its foundational promise of providing a dignified retirement for more Australians.
Key Concepts in Bill
Preserve savings means that superannuation savings should not be accessed for purposes outside of retirement income, apart from in exceptional circumstances.
Deliver income means super savings should be drawn down to provide individuals a source of income during retirement; income delivered in retirement is derived from contributions made to member’s super account and investment return on those assets.
In the context of objective of super, dignified denotes a standard of financial security and wellbeing in retirement which allows the person to participate economically and socially in their community; dignified does not mean the same level of income.
Specifically, it does not mean the same level of income in retirement for all Australians and many Australians will rely on a combination of super savings, government support as well as private savings in order to achieve a retirement that is dignified.
As a subjective concept, the concept of dignified allows individuals to apply their own values as well as judgments about what a dignified retirement is to them; accordingly, said community expectations of a dignified retirement may change over time.
Said that this should be reflected in policy-makers’ assessment of concept of dignified.
In addition, the inclusion of the concept of equitable in the objective reflects that super policy can have a distributional impact across Australian society, and policy-makers need to be aware of these impacts when making changes to the super system.
Sustainable signifies that the superannuation system should be robust to demographic as well as economic change along with cost-effective in achieving its objective.
Statement of Compatibility
Bill provides that a statement of compatibility with the objective of super must be prepared for a bill or regulation that relates to super (unless an exception applies).
The legislation does not prescribe what information must be included in the statement of compatibility and it may take whichever format and structure is most conducive to the nature, size, as well as complexity of the bill or regulation to which it applies.
Statements of compatibility with the objective of super are only required for bills or regulations relating to superannuation; relating to superannuation is not a defined term so takes its ordinary meaning; bill will commence 28 days after Royal Assent.
Exceptions
Statement of compatibility will not be required where nature of legislation, reg, or amendment does not involve substantial change in policy in the law relating to super.
This includes bills and regs re super where provisions are minor or technical in nature.
In addition, where the regs remake sunsetting regs; where new regs do not involve a substantive change in super policy; or where the amendments deal with the following.
Namely, allocation of a super interest between spouses following relationship breakdown; or they deal with super arrangements (schemes and governance) for AST GVT civilian employees, members of parliament and members of the Australian Defence Force and retirement benefits for Federal Judges and Governors-General.
Legislation dealing with these super arrangements perform a similar role to trust deeds in the broader super industry and do not have industry-wide application nor represent substantive changes in super policy; and includes any other thing prescribed by regs.
Next Steps
Bill will follow the required legislative process.
Nov. 30, 2023 Bill Referral
On Nov. 30, 2023, AST PRL said the Superannuation (objective) bill 2023 above was referred to the Senate Economics Legislation Committee for inquiry and report by Mar. 28, 2024; the closing date for the committee receiving submissions is Feb. 9, 2024.
Document dated Nov. 30, 2023, received from AST PRL Dec. 4, summarized on Dec. 7.
Apr. 2024 AST FSC on Committee Report
On Apr. 11, 2024, AST FSC said AST PRL stated the Senate Economics Legislation Committee handed down Superannuation (objective) bill 2023 [provisions]report.
This report, which was handed down on Apr. 2, included a cross-party recommendation that Senate pass the bill; the bill will continue to follow required legislative process.
In Nov. 2024, AST APRA spoke to committee re the retirement system, see #233879.
Dec. 2024 Act Registered
On Dec. 12, 2024, AST GVT registered the Superannuation (objective) act 2024 in relation to the bill above, after it received the royal assent on Dec. 10, 2024.
The whole act comes into force in accordance with section 2, on Jan. 7, 2025.
Regulators
AST FSC; AST GVT; AST PRL
Entity Types
CNSM; Fiduciary; Pension
Reference
RF C2024A00129, 12/12/2024; Art 78, 4/11/2024; Info 4/2/2024; Rp ISBN 978-1-76093-645-7, 3/28/2024; Info 11/30/2023; Bill, Info, PR 11/16/202; ESG; Citation: Superannuation (objective) act 2024;
