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Outlined below are all the latest news you 'need to know'.
Prime Minister’s announcement of Jobseeker changes
The Prime Minister announced several changes to the JobSeeker Payment. The main changes include:
There will also be changes to the Mutual Obligation Scheme. The major changes include:
Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020
The new legislation will require financial services providers to include in Financial Services Guides a statement explaining lack of independence if they receive commissions, rebates from product providers or have a conflict of interest.
Advisers charging ongoing advice fees must include in the annual Fee Disclosure Statement the services provided in the past 12 months and those to be provided in the next 12 months.
Clients must opt into ongoing advice fees in writing annually from 1 July 2021. For existing ongoing advice fee arrangements, advisers have until 30 June 2022 to receive written consent.
Ongoing fees from MySuper products will be banned. However one-off advice fees can be charged. Existing ongoing advice fee arrangements will cease from 1 July 2022.
These changes apply to ongoing advice fees and not contracts for advice for a fixed term of less than 12 months.
It is anticipated that ASIC will release guidance on these changes shortly. Advisers should review ASIC guidance when it becomes available.
Treasury Laws Amendment (Your Future, Your Super) Bill 2021
The Bill seeks to implement the changes including:
‘Single default fund’ - Under the proposal, employees who start a new job on or after 1 July 2021 will have employer super contributions directed to their existing ‘stapled fund’ (defined in the regulations) if one exists. Employers will obtain information about the employee's existing superannuation fund from the Australian Taxation Office, if it is not provided by the employee. The purpose of this amendment is to reduce the instances that members accumulate multiple superannuation accounts every time they change jobs.
Employees will be able to advise their employer to make contributions to a different fund if they wish.
Currently, employees who don’t advise their employer of their choice of super fund are allocated a default super fund by their employer each time they start working for a new employer.
‘Addressing underperformance in superannuation’ –
The bill will require the Australian Prudential Regulation Authority (APRA) to conduct an annual, objective performance test for MySuper products and other products to be specified in regulations.
All funds that fail the test will be required to notify members in writing. Where a fund has failed the performance test in two consecutive years, the fund will be prohibited from accepting new members into that product.
In addition amendments in the Bill will facilitate the implementation of the YourSuper comparison tool previously announced in the 2020/2021 Federal Budget. The tool will be available from 1 July 2021. The website will be designed to make it easy for members to choose a superannuation product based on fees and performance information.
Advisors should compare their clients existing ‘stapled fund’ with any employer fund that may be offered when they start a new job. As your client will not default into the available employer plan they will have to actively choose the new scheme if is a more suitable fund. For example, the new employer plan may offer discounted fees and automatic insurance offerings depending on the scale of the plan.
Advisers should familiarise themselves with the new YourSuper comparison tool when it becomes available from 1 July 2021. The tool may assist with comparing funds and provide a discussion point when talking to clients who may actively use the tool themselves.
If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.
DisclaimerThe information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.