30 Aug 2019
It’s been a busy few months with reports from the Royal and Productivity Commissions, and more proposed changes to insurance in super.
After May’s federal election, the Australian Financial Review published an interesting article where Treasurer Josh Frydenberg outlined plans for a review of the retirement income system. While there’s been no formal announcement yet, it’s likely to follow the Productivity Commission’s (PC) recommendation for an examination of the role of compulsory super, and the broader retirement income system. That’s code for reviewing how super interacts with the Age Pension. This is likely to take at least 18 months, and the industry has already started discussing what outcomes we’d like to see–among them long-term certainty around super rules. Whether this is likely remains to be seen.
The winter sittings of Parliament were brief but there were a couple of bills to keep an eye on. One of these will further change the way super funds provide insurance to members. While it’s yet to be debated, it’s already acquired a catchy acronym ‘PMIF’ from its longer Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019. If passed, there’ll be more changes to insurance for young members and those with small accounts. We’ll advise any affected members if this is the case.
The other proposed bill will enable employees with more than one employer to negotiate an exemption from receiving certain employer super payments in order to avoid unintentionally breaching their concessional contributions cap. Again, another bill to watch, although this is only likely to affect a small number of higher income earners.
The Royal Commission and the PC reports are themselves large pieces of work for policy makers, industry and the Parliament. I expect there to be significant industry consultation on how the Government implements the recommendations from these reports before the final law is settled and taken to Parliament. The Government announced a timeline to implement the recommendations of the Royal Commission by the end of 2020. It will require amendments to more than 40 pieces of law and will consume a significant amount of the Parliament’s time.
Parliament returns on 9 September and I’ll be keeping a close eye on developments. Expect to hear more about PMIF and, potentially, some debate about plans to implement to recommendations from the two reviews.
Benedict Davies
Manager, Industry Policy