Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION INDUSTRY (SUPERVISION) AMENDMENT (YOUR FUTURE, YOUR SUPER--ADDRESSING UNDERPERFORMANCE IN SUPERANNUATION) REGULATIONS 2022 (F2022L01046)

EXPLANATORY STATEMENT

Issued by authority of the Assistant Treasurer and Minister for Financial Services

Superannuation Industry (Supervision) Act 1993

Superannuation Industry (Supervision) Amendment (Your Future, Your Super--Addressing Underperformance in Superannuation) Regulations 2022

The Superannuation Industry (Supervision) Act 1993 (the Act) governs the prudent management of superannuation funds and the supervision by the Australian Prudential Regulatory Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the Commissioner of Taxation.  

Section 353 of the Act allows the Governor-General to make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Superannuation Industry (Supervision) Amendment (Your Future, Your Super--Addressing Underperformance in Superannuation) Regulations 2022 (the Regulations) is to amend the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations) to defer the application date of the annual performance test to trustee-directed products for 12 months to 1 July 2023.

Under the Principal Regulations the performance test applies in relation to MySuper products on and after 1 July 2021 and in relation to trustee-directed products on and after 1 July 2022.

The application of the annual performance test to trustee-directed products requires amendments to the Principal Regulations to clarify how the test will apply to trustee-directed products. The deferral allows extra time for public consultation of these amendments.

As this is a minor and technical amendment, public consultation on the Regulations was not undertaken.

Details of the Regulations are set out in Attachment A.

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.

The Regulations commenced on the day after they were registered on the Federal Register of Legislation.

Regulation Impact Statement

The 'Superannuation Reform--Your Future, Your Super' measure announced in the 2020-21 Budget is estimated to have a total regulatory impact of $5.1 million per year on business and individuals.

The Productivity Commission's report, Superannuation: Assessing Efficiency and Competitiveness, has been certified as a process and analysis equivalent to a Regulation Impact Statement for the purposes of the Government decision to implement this measure (OBPR22-02634). The report can be accessed through the Australian Parliament House website.[1]

A Statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

Details of the Superannuation Industry (Supervision) Amendment (Your Future, Your Super--Addressing Underperformance in Superannuation) Regulations 2022

Section 1 - Name of Regulations

This section provides that the name of the regulations is the Superannuation Industry (Supervision) Amendment (Your Future, Your Super--Addressing Underperformance in Superannuation) Regulations 2022 (the Regulations).

Section 2 - Commencement

Schedule 1 to the Regulations commence on the day after the instrument is registered on the Federal Register of Legislation.

Section 3 - Authority

The Regulations are made under the Superannuation Industry (Supervision) Act 1993 (the Act).

Section 4 - Schedule

This section provides that each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in the Schedule to this instrument has effect according to its terms.

Schedule 1 - Amendments

Item 1- Amendment to the application date

Division 14.27 of the Principal Regulations set out the application and transitional rules for the performance test. Item 1 amends paragraph 14.28(1)(b) of the Principal Regulations to change the application date so that the amendments relating to performance test apply in relation to trustee-directed products on and after 1 July 2023.

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Superannuation Industry (Supervision) Amendment (Your Future, Your Super--Addressing Underperformance in Superannuation) Regulations 2022

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Superannuation Industry (Supervision) Amendment (Your Future, Your Super--Addressing Underperformance in Superannuation) Regulations 2022 (the Regulations) is to amend the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations) to defer the application date of the annual performance test to trustee-directed products (a class of Part 6A product) for 12 months to 1 July 2023.

Division 14.27 of the Principal Regulations set out the application and transitional rules for the performance test. Item 1 amends paragraph 14.28(1)(b) of the Principal Regulations to change the application date so that the amendments relating to performance test and the comparison tool apply in relation to trustee-directed products on and after 1 July 2023.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.