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SIS amended to make way for MySuper
The Superannuation Industry (Supervision) Act will be amended to allow super funds to transfer accrued default amounts (ADAs) to MySuper products unless the member actively opts out.
The Australian Prudential Regulation Authority (APRA) said the amendment was necessary to clarify the concept of a successor fund in ADA transfers due to conflicting successor fund transfer requirements between SPS 410 (the MySuper authorisation and transition standard) and r. 6. 29 of the SIS Act.
The additional paragraph makes opt-outs valid only on the basis that the member has directed the licensee to place the ADA into one or a number of choice investment strategies, or an alternative MySuper product.
Super funds will also need to provide a transition plan for ADAs with MySuper applications under the standard, despite the four-year legislative timeframe on the transfer of ADAs.
Submissions had said the transition plan was irrelevant, impossible to prepare and unreasonable given the length of the transition period, but the Australian Prudential Regulation Authority (APRA) has pushed ahead, saying it is only necessary for licensees to provide the bones of the plan.
It said the process and timeframes of submitted transition plans would support APRA in determining the applicant's likely compliance with enhanced trustee obligations.
It said documents relating to prudential standards, such as conflicts and risk management policies, which do not come into effect until 1 July 2013, would also help in APRA's prospective assessment of licensees.
APRA did drop the need for super funds to provide the number of ADAs and their aggregate value, citing practical difficulties that may force super funds to continually change data items.
Reporting on ADAs has been deferred until data collection commences under the proposed revised reporting framework, but APRA urged funds to move ADAs at the earliest possible opportunity.
It said submissions that raised issues with identifying ADAs in investment options other than the licensee's current default option were outside of the scope of APRA's consultative process.
The requirement to include demographic information regarding members was also removed.
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