(pictured: Kelly O’Dwyer)
After several years of discussion with the industry and delays on its introduction, the Government has proposed in new draft legislation a less-onerous disclosure requirement on portfolio holdings by super funds.
The new proposals, described in this explanatory memorandum published last week, stop at the underlying fund or product level in most cases. They represent a victory for industry groups such as the Australian Custodial Services Association which had argued about the costs and lack of benefits associated with the previous plan of full disclosure of all underlying investments down to individual securities, including private equity and hedge fund holdings.
The former position dates back to 2012 but introduction of its requirements was delayed until July 2016 while ACSA and other industry bodies negotiated with Treasury and APRA.
Kelly O’Dwyer, the assistant treasurer, said the proposed changes would ensure “Australians are able to better understand and compare the performance of superannuation funds across the industry, to see where their funds are invested and have greater ability to switch funds, if they choose to do so”.
The Government’s memorandum published last week says: “Consultation on the current [portfolio holdings disclosure] obligations have indicated that there are significant compliance costs in collecting and collating data for all assets held indirectly (held by third parties). Concerns have also been raised by some superannuation funds about the requirement to disclose data, which relates to private equity investments, unlisted assets and other commercial in confidence arrangements.
The amendments in this Bill will address the comments in the consultation and other concerns raised by industry.”
It says two important changes are:
- The ‘registrable superannuation entity’ (RSE) must publish, for each of its investment options, information about the nature and value of financial products or other property that the RSE, or an associated entity… has directly invested in. The obligation to include information about financial products, or other property that non-associated entities have directly invested in will be repealed; and
- The reporting obligations on parties to contracts and arrangements that acquire a financial product using the assets, or assets derived from assets, of an RSE will be repealed.
The Government also introduced proposed changes to the MySuper dashboard aimed at providing simpler comparisons between fees, risk and return for funds (details in the same explanatory memorandum).
In separate legislation, choice of fund will be extended to approximately 40 per cent of the estimated 2 million workers who currently do not have it through their employment arrangements.
AIST expressed concern about the changes to the dashboard comparisons regulations, as being too limited, and the extension of choice of fund as being another move towards breaking the link between industrial relations and superannuation.
“We are also concerned that the Government is not allowing the Fair Work Commission to do its statutory job. This job was recommended by the Productivity Commission in 2012, and involved setting default funds, applying a quality filter and increased transparency and accountability. The legislation is in place, Royal Assent given, but requires further Government action to be commenced,” AIST said in a statement last week.
Interested parties have until January 20, 2016 to comment on the discussion paper. AIST said it would be putting in a response to the Government and that members interested in discussing this should contact David Haynes (E: firstname.lastname@example.org).