The prescriptive nature of the MySuper draft legislation is likely to lead to a dramatic increase in “inadvertent compliance breaches”, according the Association of Superannuation Funds of Australia (ASFA).
In its submission to the Government on the MySuper draft legislation, ASFA has called for a principles-based regulatory environment rather than one that is prescriptive in its approach.
ASFA chief executive Pauline Vamos said that there was too much prescriptive detail in the exposure draft, which would have the likely outcome of “driving behaviour around the legislative intent”.
“Adopting a prescriptive approach to drafting means the bill cannot reflect the different products offered and the variety of decisions trustees make, and there is a significant risk that it will stifle innovation,” she said.
The ASFA submission also argued for a longer transitional period until the MySuper environment is implemented, arguing that forcing trustees to enact “change management” without regulatory certainty would create additional costs for members.
“Business requirement documents, let alone functional and technical specifications, cannot be agreed upon and signed off, nor most work commenced, until such time as there is a high degree of legislative certainty,” said Vamos.
While she agreed that funds should be able to offer MySuper products from 1 July 2013, Vamos said that the period from which default contributions must be made to a MySuper product should be delayed until 1 July 2014.
ASFA also reiterated its call for capital gains tax rollover relief for superannuation funds. Failing to offer such relief could be a major obstacle to future mergers, since funds would be reluctant to merge if doing so could create significant costs for members, Vamos said.
The industry body also used its submission to query whether lifecycle investment options should only be based on age, and to express its disappointment that MySuper products will be prevented from paying a pension.
