Assistant Treasurer outlines plan of action and priorities
By Andy McLean
Australia’s new Assistant Treasurer The Hon Stuart Robert, MP has heeded calls from the FSC and others in the financial services industry to amend the government’s Comprehensive Income Products for Retirement (CIPRs) proposals. However, he is resolved to fast track a raft of other superannuation measures without further amendments.
Speaking at a BT Political Series event hosted by the FSC last week, Robert announced a CIPRs two-year extension for superannuation trustees to offer a retirement income strategy for their members. The deadline has been postponed to 1 July 2022. “The intent is not to slow the momentum, it’s simply to give you more time to frame and structure your product offering,” said Robert.
The Assistant Treasurer also announced his intention to “raise the threshold from account balances from $50,000 to $100,000” to ensure that “CIPRs will be required to be offered to those who will benefit most”.
Speaking at the event, the FSC’s CEO Sally Loane welcomed the CIPRs amendments, while sharing this message for financial services leaders: “Don't be complacent when we get extended timelines from government because we [still] have to be in there innovating and making the best products for consumers.”
Superannuation bills heading fast towards the Senate
The Assistant Treasurer said he has begun discussions with Independents in the Senate, seeking support to pass five superannuation bills by the end of November. The bills propose a number of changes affecting member outcomes, including “empowering the ATO to proactively reunite people’s unclaimed or low and inactive accounts with their active superannuation accounts, to cap fees on certain low-value accounts, ban exit fees (apart from the standard ‘buy-sell spread’), and require insurance to be provided on an opt-in basis for members with low balances under $6,000, inactive members, or those under 25”.
Robert said he was unequivocal in his determination to pass the bills through the Senate by the end of November, though only rated his confidence-level of doing so as, “probably above 50%” due to “the Senate’s capacity to throw a curve ball, never underestimate that”.
At the FSC event, Robert also announced “three new measures to address some minor but important issues that affect retirees … First, we're fixing the definition of life expectancy period for innovative income streams to account for delays in a leap year… Second, we're providing transfer for balance, credits, and debits for innovative income stream products that are paid off in instalments. And third, we're fixing the valuation of defined benefit pensions under the transfer balance cap to reflect when pensions are permanently reduced.”
Asia Region Funds Passport uncertainty
During his speech, the Assistant Treasurer also confirmed that he and the Treasurer are considering requests from the financial services industry to resolve uncertainty over tax treatment for foreign investment via the Asia Region Funds Passport, which is set to launch on 1 February 2019.
Loane summed up the FSC’s position on the matter, saying: “Australia invented the [Asia Region Funds] Passport. This was set up many years ago to assist Australia to become a global financial centre, with hopes that the Passport would one day rival the successful UCITS [Undertakings for Collective Investment Transferable in Securities] regime. We don't want to see years of work go to waste. We urge the government to undertake this small but critical piece of microeconomic reform.”
Engage with regulators and government
Reflecting on the widespread change and disruption facing the financial services sector currently, Robert encouraged business leaders to communicate openly with regulators such as APRA. “[The regulator’s] job is not to stop you doing stuff. Their job is to regulate [and] to provide oversight and a sense of confidence. Engage strongly with our regulators.
“If you make mistakes, put your hand in the air and say, ‘I've made a mistake’. It's the cover up that gets you killed in politics and in business. Regulators will always appreciate you being up front. Bad news does not get better with time at all. So, if we can do that together, we'll land well.”
Robert also extended an invitation for financial services organisations to speak directly with government, saying: “We want a strong, consistent, well-regulated, well-understood, globally well-respected financial market. And we can only do that together. So stay engaged with government.”
“We're not here to give anyone a hard time. We're here to sensibly work through things. You will win some and you'll lose some, but I guarantee you'll lose every single fight you don't turn up to. So, turn up, engage, we'll let you know what we can do, what we can't do. We'll have a very honest conversation with you.”