Next year is shaping up to be another crunch year for superannuation funds, with a raft of changes having a start date of 1 July 2017.
With the re-election of the Turnbull Coalition Government we should now expect to see cabinet moving full steam ahead to implement the 15 major changes to superannuation announced in the May Budget – and they will need to move fast to get it all in place in the first year of their new term of government.
Everyone in the super industry remembers how much super funds, administrators and custodians have been put under the regulatory pump since 2011 in order to implement Stronger Super, especially MySuper, SuperStream and APRA data reporting – and the some parts of the implementation of these are continuing five years later.
The next round of change is going to be as every bit as complicated and difficult. However, unlike Stronger Super, which was largely introduced with community and super industry consensus, there was a strong negative reaction to many of the budget measures, particularly from high net worth individuals who may be paying more tax on their super. They are going to continue to argue for aspects of the package to be watered down, notwithstanding the result of the election.
Let’s have a look at the best case scenario, to get a sense of how tight the timetable is going to be. Treasury will be circulating discussion papers and draft legislation over the next two months. Assuming that goes smoothly with that – and remember they also have to draft parallel legislation for Defined Benefit funds – legislation to give effect to the changes will be introduced into the Spring session of Federal Parliament.
Once this all clears the House of Representatives the legislation will probably be sent to the Senate in November and more than likely we will see it referred to a multi-party Senate committee.
Continuing with our likely scenario, the Committee will call for submissions, conduct hearings and generally review the legislation, probably reporting in February. Assuming some changes to the legislation are made through this process, the final legislation would conclude its journey through Parliament by the end of March 2017, receiving Royal Assent shortly after that.
That is the best case scenario! It means that super funds and their significant others will only have the legislation in its final form less than three months before implementation. Supporting regulations and regulatory guidance will only be finalised after the legislation.
If the Government encounters any significant legislative, political, legal, regulator or implementation obstacle, it will be very hard for the Government to keep to its 1 July 2017 deadline.
As well as navigating these changes, the Government also wants to introduce a new post-retirement framework, continue to push for new governance requirements for super funds, and implement new disclosure requirements. They will also have to respond to the Productivity Commission’s report into the efficiency and competitiveness of superannuation, due next month.
It’s not only the Government that’s going to be busy. All of us in the super industry will have to work very hard to come to term with these changes, their implementation and ongoing operation. I’m exhausted just thinking about it!
Operationalising regulatory change has always been a very important capability in the super industry, but its importance is just about to ratchet up a notch.
Executive Superannuation Policy Advisor, VIC