Australia: Superannuation Update

Last Updated: 27 February 2011
Article by Peter Charteris


On 16 December 2010 the Assistant Treasurer issued a paper entitled 'Stronger Super' in response to the 36 pages of recommendations in the Super System Review Final Report delivered on 30 June 2010. The key recommendation, that there be a separately regulated, simple, low cost product, is to be adopted. Various trustee governance recommendations are to be reviewed, although some have been rejected outright.

There is to be increased reporting.

The key elements of the SuperStream recommendations, dealing with the streamlining of aspects of fund administration, are to be adopted.

There are to be some changes to the regulation of self managed superannuation funds.

This article examines key aspects of the new MySuper product, trustee governance and SuperStream.  


MySuper is to be introduced as a separately regulated product, and Fair Work Australia asked to vary awards so that only MySuper funds are default funds named in awards. A Productivity Commission review will determine whether default funds will be a limited number, as is the case now, or whether all regulated MySuper products will be eligible default funds.

An RSE licensee will need a MySuper licence, and will be able to offer a single MySuper product.  The Government will consider further whether an RSE licensee which has separate brands should be able to offer separate MySuper products. Trustees will still be able to allocate costs on a fair and reasonable basis between products.

Numerous features that are currently a matter for the trustee will be subject to an express regulatory regime. 

These include:

  • Single investment strategy
  • Insurance cover
  • Switching fees/exit fees
  • Fee discounts
  • Performance based investment management commissions
  • Intra fund advice (if offered).

w compliance regime will therefore need to be developed for the MySuper product.

Each trustee will be required, on an annual basis, actively to examine and conclude whether its MySuper product has sufficient scale on its own (with respect to both assets and number of members) to continue providing optimal benefits to members.

ther the provision of intra-fund advice should be compulsory is to be the subject of further consultation.

The Government will ask ASIC to continue the development of retirement forecasts that can be used by trustees.

uper products will be able to be offered from 1 July 2013.  Once awards are amended, after a transitional period, MySuper will have to be offered as the default product.


The recommendations that the current rules regarding equal employer and member representation should be abolished are not to be adopted.

The many recommendations as to new statutory duties for directors are to undergo further examination and consultation.

Just what duties should be adopted is a difficult question.  The Final Report in the introduction of Part 2 at page 44 states that the governance standards applying to major listed entities are a reasonable starting point.  However, the Report contains little discussion as to whether in fact this may be an appropriate level.

At present, the directors of a trustee which is a proprietary limited company are subject to SIS and to the directors' duties applying to such a company.  Under these rules, conflicts are able to be waived.  Stronger Super, however, would introduce an increased focus on director's conflicts as determined by APRA Prudential Standards.  These Standards might include examples of conflicts of interest and of duty that would not be allowed.

The Final Report recommended the creation of a new office of trustee director under the SIS Act, which would incorporate duties that would otherwise be captured in the Corporations Act, as well as 're-focussed' duties for trustee directors.

In particular, a director would have a duty 'to act solely for the benefit of members' and various specific aspects will be set out – avoid conflicts of interest, personal benefits, act honestly, exercise independent judgement.

The duty to members would have priority over the duty to the trustee company where there was a conflict between duties owed to the members and to the company.  This is a very different duty to the existing duty of a company director to act 'in good faith in the best interests of the company', owed under the general law (and also under the Corporations Act) to the company.

The Government is to consider further whether these proposals would achieve a more accountable and efficient trustee regime.

We note that, under these proposals, trustee directors would owe different sets of duties, under the SIS Act and the general law, which would have different contents and which would be owed to different people (trustee company/ fund members).  It also seems likely that trustee directors would have a much greater exposure to member litigation, as they would owe duties directly to members.  At present, the direct claim is against the trustee company and not the directors.

Other recommendations which are supported include a requirement that a trustee provide a member with reasons for its decision in relation to a formal complaint.

Further, the Government supports in principle the proposal that an industry council co ordinated by APRA should develop a Code of Trustee Governance.  The Code would include but not be limited to:

  • Higher standards of competencies
  • Maximum tenure and retirement by rotation
  • Maximum size of board
  • Demonstrable skill set within first 12 months of appointment
  • Annual performance review of each trustee director
  • Gender and other diversity requirements.


It is the area of superannuation payment processing that offers the greatest opportunity for cost savings.

At present, employers, being the main payers of superannuation contributions, have no obligation to use a unique identifier when remitting contributions.  Many employers do not provide more than the most basic information, such as a name and amount.  Given the number of common names of fund members, trustees then spend considerable time identifying the member to whom the payment relates.

A member's Tax File Number (TFN) could, in theory, be used as an identifier.  Section 299C of the SIS Act requires an employer who has been quoted a TFN by an employee after 1 July 2007 to quote it to the trustee of the fund to which contributions are to be made for that employee.  Failure to do this is an offence.  However, this obligation is not enforced and so is largely a dead letter.

The proposed new approach, using the TFN as the primary identifier, will apply from 1 July 2011.  The approach is twofold.  Firstly, the employer is to provide the TFN of all employees to the fund, but again the obligation is to be without penalty.  Secondly, the Australian Taxation Office is to establish an employment website, so that when an employer registers the tax status of new employees, the TFN details are remitted to the nominated fund.

The employer obligation, without penalty, is unlikely to work and is only a minor extension of the current non working model.  However, using the ATO as a central data body creates a genuine opportunity to address these problems.  The biggest risk is in implementation, as the provision of such information by the ATO is not part of its core activity - raising revenue.

Member transfers between funds are to be streamlined and the time frames shortened.  However, the requirements under the Anti Money Laundering legislation are to apply at the time of joining a fund, rather from the payment stage as at present.  This has the potential to cause delays.

There is to be industry standardisation relating to forms and protocols being used.  This will involve extensive industry consultation.

A trustee, with the authority of the member, will be able to initiate a rollover of all or part of a benefit from another fund as though the member had initiated the request, without any requirement for proof of identity.  Just how this will work in practice remains to be seen, and there will of course need to be adequate identity fraud protections.


The proposed changes seem likely to be very substantial, and will affect every area of funds' operations.  As always, much will turn on the detail to be developed during the consultative process and it will be difficult for funds to make much progress with their preparations until that detail is available.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions