Ministerial veto changes fail to blunt opposition to YFYS legislation

One of the worst elements of the Government’s Your Future, Your Super legislation – the Ministerial Veto power – has been removed but industry superannuation funds will be lobbying cross-benchers when the legislation enters the Senate this week.

According to the Australian Institute of Superannuation Trustees (AIST), removal of the ministerial veto provision from the bill “doesn’t remove the direct and immediate threat to millions of Australians who will be stapled to underperforming and untested super products.”

If the AIST has its way, the legislation will not only be rejected, but scrapped with a view to beginning the process again.

AIST chief executive, Eva Scheerlinck said that despite her organisation supporting the objectives behind the proposed changes, the flaws within the legislation will result in significant unintended detriment to members.

“A key concern is the Government’s heavy reliance on regulations, which are not subject to the same level of Parliamentary scrutiny, for substantive and contested measures. The draft regulations were not released in time for proper examination by a Senate Committee considering the legislation, and remain silent in many places where regulatory guidance is necessary.”

The AIST said a key concern was that the legislation and regulations did not allow for the testing of all super products with many “Choice” products carved out therefore leaving members in those products vulnerable to being stapled to poorly performing funds.

It noted that APRA’s deputy chair, Helen Rowell, noted at CMSF that there a was wider range of investment performance outcomes in choice products compared to MySuper products, “particularly at the poorer-performing end of the spectrum.” She also observed that administration fees in that sector are ‘notably higher’ than comparable MySuper products.

Since the changes to superannuation were announced at last October’s Federal Budget, AIST has argued that not testing all superannuation products would leave members worse off and Scheerlinck said she was querying why, when the regulator was highlighting poorly performing Choice products, the legislation allowed many of them to escape scrutiny.

“The types of products that won’t be tested are some of the worst performing super [‘Choice’] products,” she said.