The Federal Government has accepted some 14 of the 22 recommendations in the Quality of Advice Review (QAR), allowing superannuation funds to provide more retirement advice and information to their members.
At a gathering of industry executives, Minister Stephen Jones’ announcement confirmed super funds would be the big winners from the QAR.
“Super funds are well‑suited to safely meeting the needs of their members,” Jones said.
“They are already governed by strong obligations to act in the best financial interests of members and act for the sole purpose of providing retirement benefits to members.”
Restrictions on collective charging would be amended to allow super funds to provide more retirement advice and information to their members.
He confirmed the government would work with industry to consider adopting, and tailoring as needed, QAR recommendations 1-4 (around personal advice, general advice, relevant providers, and good advice duty), the remaining parts of recommendation 5 (statutory best interest duty), and recommendations 12.1 and 12.2 (on design and distribution obligations) to allow super funds to provide advice.
Additionally, superannuation trustees would be provided with legal clarity around current practices for the payment of adviser service fees, accept in principle recommendation 7 around deduction of adviser fees from super.
“The remaining recommendations form the model that we will use as a starting point but there are some outstanding questions. What is the scope of advice that can be provided by a fund? What are the education standards needed for an employee or representative? And how do we hold them to an appropriate duty?” he said.
“So, we are open to tailoring that model as necessary based on feedback from industry and Treasury’s advice to make sure it leads to meaningful outcomes for members.
“In the coming weeks, Treasury will work with industry to finalise the details for how these recommendations can be effectively implemented.”
In her report, reviewer Michelle Levy had discussed how super fund trustees should be able to provide personal advice to their members about their interests in the fund, including when they are transitioning to retirement.
In doing so, trustees will be required to take into account the member’s personal circumstances, including their family situation and social security entitlements if that is relevant to the advice. Super fund trustees should have the power to decide how to charge members for personal advice they provide to members and the restrictions on collective charging of fees should be removed.
She said super trustees should be able to pay a fee from a member’s super account to an adviser for personal advice provided to the member about the member’s interest in the fund on the direction of the member.
The final report had been issued in February.
Previously, research by NMG Consulting, commissioned by the Financial Services Council, found that implementing the QAR’s proposals could help two million additional Australians collectively draw down $22.5 billion more from their superannuation by 2040.
The figure could increase to 3.4 million retirees by 2060, increasing annual drawdowns to $42 billion.
The Government’s final response on the Delivering Better Financial Outcomes package was expected to be released later in 2023.