The FAQs on this page refer to provisions of APRA’s draft prudential standards for superannuation and proposed legislative amendments which have not yet become law. Accordingly, the views and draft provisions set out in these FAQs are subject to change. The FAQs may also include links to external websites that are beyond APRA’s control. APRA accepts no responsibility for the accuracy, completeness or currency of the content of these FAQs.
Note: the numbering of these questions is fixed and will not change as new questions are added.
Updated: 16 April 2013
FAQ 29: When will the authorisation package be finalised?
FAQ 2: When will the authorisation package and Prudential Standard SPS 410 MySuper Transition be finalised?
FAQ 3: When can entities submit draft applications to APRA?
FAQ 4: Is there a limit on the number of MySuper products an RSE licensee can offer?
FAQ 5: Can there be different investment fees for lifecycle products across different stages of the lifecycle?
FAQ 6: Can insurance premiums be deducted from a member's MySuper account?
FAQ 7: Will members who have a MySuper product, and a separate non-MySuper interest, in the same fund need to have two accounts with separate statements?
FAQ 15: What different arrangements for administration fees for employers will be allowed for authorised MySuper products?
FAQ 21: Is APRA charging a fee for processing MySuper applications?
FAQ 22: The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 indicates that there is to be no subsidisation between MySuper products and choice products within a fund. Does this apply to aspects of a fund’s operations, such as marketing or administration costs, or can these be shared across a fund?
FAQ 23: Can a large-employer MySuper product be 'white-labelled' for another non-associated large-employer product?
FAQ 24: In the event of the death of a member, an RSE licensee may choose to invest life insurance proceeds in an investment option with a conservative investment strategy. Will this practice be permitted to continue for a member who has an interest in a MySuper product, or will the proceeds need to be invested in the MySuper product?
FAQ 25: RSE licensees often charge a fixed dollar administration fee as well as a percentage fee to all members. The percentage fee is capped by some RSE licensees at certain balances. Is this practice permitted for a MySuper product?
FAQ 27: How can an RSE licensee attest to scale when the MySuper product is a small option within the RSE, particularly during the transition period when accrued default amounts are yet to be transferred to the MySuper product?
FAQ 30: Can RSE licensees choose not to provide death and TPD insurance on an opt-out basis to certain categories of members?
FAQ 34: Who is eligible for an administration fee discount provided to a particular employer-sponsor?
FAQ 35: When the investment option underlying a proposed MySuper product is a lifecycle investment option, does APRA require additional information in the MySuper authorisation application?
FAQ 36: Can an exemption be granted from the payment of insurance premiums and fees for casual employees in MySuper?
FAQ 37: Does APRA intend to ensure that the name of each authorised MySuper product is unique? If an RSE licensee decides to 'white label' its MySuper product for a large employer, are there any guidelines for the name that should be used in this instance?
FAQ 38: As a white-labelled MySuper offering will not be listed on APRA's list of compliant MySuper products, how will employers know that a white-labelled product is MySuper compliant and authorised by APRA?
FAQ 39: Regarding Item B2.5 in the MySuper application form, does APRA expect that the document will provide details of the methodology for establishing cost recovery across all relevant fees?
FAQ 41: Can an RSE licensee choose to use a different insurer for a particular employer plan (including MySuper members and choice members), without the use of a 29TB tailored MySuper product?
FAQ 42: Can an RSE licensee stipulate that a member can have life and TPD cover, but cannot opt out of only life cover?
FAQ 43: Can an RSE licensee, on receipt of TPD insurance benefits, deposit this amount into a cash option until the member advises the investment option they wish the monies to be transferred to? Where the member does not respond within a reasonable period, can the RSE licensee choose to transfer the monies to the default investment option?
FAQ 44: Under MySuper, switching fees can only be charged to the individual member that has requested a switch i.e. cost recovery. Can a switching fee be embedded in an administration fee?
FAQ 45: Must a MySuper lifecycle option have only four life stages?
FAQ 46: As part of a MySuper application, can an RSE licensee submit a board-approved, amended trust deed initially and provide a copy of the executed trust deed later?
FAQ 47: What amendments are required to be made so that, under s. 29TC, the characteristics of a MySuper Product are incorporated in the Governing Rules of the fund? *NEW*
FAQ 48: Is attaching a copy of legal advice a sufficient statement under A5.1 of the MySuper application form? *NEW*
FAQ 49: Question B2.5 of the MySuper application form states, ‘for each relevant fee category identified at items B2.3 and B2.4, attach a description of the mechanism by which the RSE licensee will establish that the fees charged do not exceed cost recovery.’ Question B2.3 includes the option of an advice fee, which can exceed cost recovery. How should question B2.5 be answered for advice fees? *NEW*
FAQ 8: Will defined benefit members need to have their default balance transferred to a MySuper product?
FAQ 9: What forms part of the accrued default amount to be transferred to a MySuper product?
FAQ 10: If an RSE licensee cannot find the paperwork to identify a choice balance, can they request that a member sign a retrospective instruction?
FAQ 11: Is APRA intending to issue guidance on the treatment of the insurance arrangements of members during the transition to MySuper?
FAQ 12: Some RSE licensees have been using the ‘MySuper’ name within their businesses prior to the introduction of Stronger Super. What are the implications for future usage?
FAQ 16: Suppose money of a member is invested in an option that was not the default option at the time it was invested, and at that time the member gave an instruction to invest it in the non-default option. Does the member have to give a further instruction, or otherwise confirm the original instruction, in order to avoid the money being treated as an ’accrued default amount’ that has to be moved to a MySuper product?
FAQ 17: Many defined benefit members have a voluntary accumulation account in addition to their defined benefit interest. Does any money in the default option for these voluntary accounts also need to go into a MySuper product?
FAQ 18: Currently, when a defined benefit member leaves their employer, the defined benefit lump sum benefit can default into another (accumulation) option. After 1 July 2013, will this money need to go into the MySuper option?
FAQ 20: Can RSE licensees apply for a MySuper authorisation that involves the rebranding of an existing default investment option?
FAQ 26: Proposed final Prudential Standard SPS 410 MySuper Transition requires an RSE licensee to identify and resolve any impediment to moving members’ accrued default amounts to a suitable MySuper product. Could the duty to act in the best interests of members represent such an impediment?
FAQ 28: Where an RSE licensee is granted MySuper authorisation effective 1 July 2013, when must it begin paying contributions into a MySuper product of the RSE?
FAQ 31: Can non-accrued default amounts be transferred into a MySuper product?
FAQ 32: Some RSEs have only one investment option under which all of its members' underlying assets are invested. How will these RSEs transition to MySuper?
FAQ 40: If an RSE licensee is granted MySuper authorisation effective 1 July 2013, when must it begin accepting contributions into MySuper?
FAQ 13: Can different MySuper products within the same fund have different single diversified investment strategies?
FAQ 14: What happens to a member if the pension phase has the same investment strategy as the MySuper option?
FAQ 33: If the investment strategy underlying a MySuper product is a lifecycle investment strategy, can a member choose to be in a particular stage of the lifecycle strategy?
A: APRA released the approved form for application for authorisation to operate a superannuation fund as an eligible rollover fund on 12 December 2012. It can be accessed at https://extranet.apra.gov.au/ using an Auskey issued to an RSE licensee.
A: APRA released the approved form for application for authorisation to offer a MySuper product on 12 December 2012. It can be accessed at https://extranet.apra.gov.au/ using an Auskey issued to an RSE licensee. APRA also released the determined version of Prudential Standard SPS 410 MySuper Transition on 12 December 2012.
A: Entities can submit draft applications to APRA at any time.
A: An RSE licensee can offer only one MySuper product per Registrable Superannuation Entity (fund) unless the additional MySuper products satisfy either the material goodwill provision (s. 29TA) or the large employer provision (s. 29TB) contained in the Superannuation Industry (Supervision) Act 1993. There is no legislative limit on the number of MySuper products, to which these exceptions apply, per fund. The RSE licensee will have to meet all requirements for each MySuper product they offer from a fund.
A: An RSE licensee can charge different investment fees for up to four age ranges of members with an interest in a lifecycle MySuper product. This does not prevent the RSE licensee from structuring the lifecycle strategy with more than four sets of asset allocation.
A: Yes, an RSE licensee may deduct from member accounts an amount that reflects the insurance premium that is attributable to each member. That premium may reflect the characteristics of the member such as age and occupation, and may also reflect the member's choice of coverage.
A: No, a single account can cover both MySuper and choice interests, just as it can cover both defined benefit and defined contribution interests.
A: Within a single MySuper product, administration fees can be varied in accordance with the administration fee exemption for employees of an employer-sponsor. This provides that a different administration fee can be charged in relation to employees of a contributing employer-sponsor or associate of that employer-sponsor and relatives or dependants of those employees. The administration fee in respect of those members must be charged on the same basis for the group. It must be no less than the cost of administration and operation of the fund in relation to that group of members.
For further information, see s. 29VB of the Superannuation Industry (Supervision) Act 1993.
A: No. APRA is not charging a fee for processing MySuper applications.
A: There can be no subsidisation between choice and MySuper products. However, there can be shared costs across a fund. Shared costs must be distributed fairly and reasonably between members holding different classes of beneficial interest in the fund (see s 99E of the Superannuation Industry (Supervision) Act 1993.
A: No. A non-associated large employer will need to have its own authorised MySuper product or use a generic MySuper product.
A: Insurance proceeds are not a contribution in respect of the member. It is a payment by the insurer to the RSE licensee, which is then allocated by the RSE licensee to non-member beneficiary(ies). On that basis, the insurance proceeds can be held in an investment option (which may or may not be the MySuper product) in accordance with the RSE licensee’s predetermined policy.
The member’s existing interest in the MySuper product may be moved to another class of beneficial interest in the fund where the member has died and the replacement meets any criteria prescribed in the SIS Regulations (see 29TC(1)(g) of the Superannuation Industry (Supervision) Act 1993). This could be done to reduce risk and preserve the balance accumulated by the member until a beneficiary can be identified and the benefits paid out.
A: The charging rules in relation to administration fees set out in the Superannuation Industry (Supervision) Act 1993 for MySuper permit RSE licensees to continue to charge a combination of a flat fee and percentage fee, provided that all members of a fund who hold a particular MySuper product are charged the same flat fee and the same percentage of their account balance. The relevant amendments to the SIS Act do not provide for the capping of the percentage fee component at certain balances within members accounts.
A: RSE licensees that offer a MySuper product are required to determine, on an annual basis, whether members who hold a MySuper interest are disadvantaged by insufficient scale compared to members who hold a MySuper interest in other funds. This will require the RSE licensee to consider all aspects of the MySuper product, including the number of members and assets at both the MySuper product level and the fund level.
The RSE licensee should be satisfied that members are not disadvantaged over time in terms of the net returns from the MySuper product, irrespective of the size of the RSE.
A: Certain groups of members may be excluded from insurance cover on the basis of ‘reasonable conditions’. APRA would expect reasonable conditions to be based on the RSE licensee’s assessment of the availability and cost of third-party insurance cover, for example, in relation to age or pre-existing medical conditions. In APRA’s view, RSE licensees cannot choose to exclude broad categories of members, such as those who do not have a standard employer-sponsor, from being provided with death and TPD insurance on an opt-out basis unless they can demonstrate that third party insurance which includes the specified group is not available, or is not available at a reasonable cost.
In any assessment of reasonable conditions, the RSE licensee remains bound by its obligation to promote the financial interests of members with an interest in the MySuper product and its general covenants to perform its duties and exercise its powers in the best interests of the beneficiaries, and to act fairly in dealing with beneficiaries within each class of membership, including MySuper. The same obligations and considerations also apply when an RSE licensee is selecting and negotiating insurance.
For more information, see s. 68AA and paragraphs 2.14-2.22 of the Explanatory Memorandum to the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012.
A: The Superannuation Industry (Supervisions) Act 1993 permits administration fee discounts to be extended to employees of an employer-sponsor or an associate of the employer-sponsor (and any relatives and dependants of those employees if the employer-sponsor is also making contributions for their benefit), provided certain requirements are met (see ss. 29VA(8) and 29VB of the Superannuation Industry (Supervision) Act 1993). This enables the RSE licensee to take into account administration arrangements that lower the cost of the RSE in dealing with certain employer-sponsors. However, the same discount cannot be extended to members who are relatives and dependents of employees of that particular employer if the employer is not making contributions for the benefit of those relatives or dependents.
A: As a lifecycle option will involve different asset allocations for specified life stages, a lifecycle investment strategy would be expected to include information on each stage within the strategy. APRA would expect an RSE licensee's investment objectives and investment strategy to specifically document how it has determined the various stages within a lifecycle strategy, the investment objectives for each stage and any specific risks to be identified and managed. In addition, an RSE licensee must set out the proposed investment fee structure (for up to four age cohorts) of the lifecycle option in the MySuper authorisation application form.
A: The 'reasonable conditions' flexibility inherent in s.68AA ensures that an RSE licensee can have casual employees as members within their MySuper product but offer them no or different insurance as part of the RSE licensees' group life and TPD policies. This means there is no need for an exemption. The insurance fee is to be charged on a cost-recovery basis.
If casual employees are permitted to join the MySuper product with a differently structured insurance offering, they should be charged an insurance fee which meets the costs of that offering.
A: No. Each authorised MySuper product will be given a unique numeric identifier by APRA. Disclosure requirements, intellectual property rights, trademarks and competition issues will remain with their normal regulators. There is no naming convention that must be used in regards to white labelled products.
A: Each authorised MySuper product will be given a unique identifier by APRA. White labelling is a device often used by an RSE licensee in marketing to an employer and members sponsored by that employer. Each white-labelled version of the product will need to identify itself as being (a version of) the authorised product and would be expected to use the unique APRA identifier. The detail of product identification is a matter for ASIC.
A: Yes. While APRA will not prescribe a particular methodology, APRA will assess the reasonableness of the RSE licensee’s approach.
A: APRA considers that the use of different insurers is permitted by the legislation.
A: RSE licensees may require members who wish to make an election in accordance with s. 68AA(5) to opt out of both life and TPD insurance. However, there is nothing prohibiting an RSE licensee from offering an option to opt out of TPD only and retain life insurance, or to opt out of life only and retain TPD.
A: APRA is comfortable with an RSE licensee taking this approach. APRA would expect the RSE licensee to disclose its approach to members.
A: RSE licensees are permitted to apply a switching fee on a cost recovery basis to the extent that the cost is not covered by the administration fee. The standard administration fee may, for example, allow for a limited number of switches, with any additional switches being charged on a cost-recovery basis.
A: A lifecycle product may have as many different investment strategies between age cohorts as the RSE licensee wishes, so long as no more than four different investment fees are applied: see s. 29VA(9) of the Superannuation Industry (Supervision) Act 1993.
A: At the time of lodgement, MySuper applications must include an up-to-date executed copy of the trust deed or governing rules. APRA does not necessarily expect that the RSE licensee can provide, in all cases, a consolidated deed, but the RSE licensee must provide an executed amending deed which effects the necessary changes to the trust deed. APRA may request a complete copy of the executed trust deed or governing rules if required. RSE licensees may choose to discuss draft amending deeds with APRA during consultation prior to lodgement.
A: The Governing Rules of a fund are generally made up of its Trust Deed and any other documents approved by the board which are binding on the operation of the fund. Under s. 29TC of the SIS Act, the Governing Rules of the fund must set out the characteristics of each MySuper product.
At question A5 of the MySuper authorisation application form, the applicant must attach an up-to-date copy of the Trust Deed and Governing Rules of the RSE.
APRA’s view is that the appropriate document to refer to the MySuper characteristics is the Trust Deed. If the characteristics are not incorporated in the Trust Deed then APRA expects that the Trust Deed will contain a reference to those other documents which form part of the Governing Rules and state which one, and at what section, that document contains reference to the MySuper characteristics as required by s. 29TC(1).
A number of Trust Deeds that APRA has sighted as part of assessing MySuper applications contain general statements to the effect that where the Trust Deed contains a statement inconsistent with the governing law, the terms of the governing law will apply. This does not satisfy s. 29TC where the Governing Rules are silent as to the characteristics set out in s. 29TC.
APRA further considers that a statement to the effect that all the requirements in the governing law are incorporated in the Trust Deed is also inadequate given the specific nature of the characteristics listed in s. 29TC. In APRA’s view, it is clearly intended that each characteristic be replicated in the Governing Rules of the fund.
A: No. Where an RSE licensee has received legal advice in regards to how the Trust Deed or Governing Rules comply with the requirement in s29TC(1), the RSE licensee should attach that legal opinion. However, APRA also expects the RSE licensee to set out its own understanding, in its own words, of how the Trust Deed or Governing Rules comply with the requirement in s29TC(1).
A: Question B2.5 states 'for each relevant fee category'. Since an advice fee does not need to be limited to cost recovery, it is not a relevant fee category and does not need to be included in the response to question B2.5.
A: No, the Superannuation Industry (Supervision) Act 1993 does not require an RSE licensee to move any part of the balance of a defined benefit member to a MySuper product.
A: The definition of an accrued default amount changed from the initial draft legislation to the final version. Section 20B of the Superannuation Industry (Supervision) Act 1993 defines accrued default amounts.
A: An RSE licensee needs to determine its own procedure for identifying an accrued default amount. Generally all amounts in the default investment option, other than amounts attributed to members who have some part of their interest attributed to another investment option, will meet the definition of an accrued default amount.
A: The four-year transition period is designed, in part, to allow for sufficient time for RSE licensees to determine the best way to transition insurance arrangements (which can be very complex) and thereby ensure the best outcomes for members. APRA will be developing guidance on a range of topics and will consider whether additional guidance in this area is necessary.
A: As one of the key points of Stronger Super is improved comparability of MySuper products, APRA expects many RSE licensees will seek to include the word MySuper in the product name. However, this is not a requirement.
If an RSE licensee uses the term ‘MySuper’ prior to the implementation of the reforms (and authorisation of a MySuper product by APRA), the RSE licensee would need to be certain it is not engaging in misleading and deceptive conduct or breaching another law relating to disclosure. In addition, from the date of proclamation, section 29W of the Superannuation Industry (Supervision) Act 1993 will make it an offence to represent that a product is a MySuper product if the product has not been authorised.
A: Nothing in the Stronger Super legislation requires a member who has already given an investment instruction to the RSE licensee to take any action whatsoever. Their instructions regarding investment choice remain binding, including where they were given to the RSE licensee of the member’s former fund which has undergone a successor fund transfer into the current fund.
A: No, any benefit of a member who holds a defined benefit interest is excluded from the definition of an accrued default amount and so does not need to be moved into a MySuper product.
A: Yes. Unless the member has given direction to invest it into an investment option other than the default option, or the default option meets one of the exceptions specified in s. 20B(3) of SIS, the money will fall within the definition of an accrued default amount and will need to be placed into a MySuper product before 1 July 2017.
A: Yes. RSE licensees can apply for a MySuper authorisation that involves the rebranding of an existing default investment option. The RSE licensee will need to make sure that the current default option meets all of the criteria for a MySuper product.
A: APRA recognises that, in some cases, it may be in the members’ best interests to delay moving accrued default amounts to a suitable MySuper product. For example, there may be difficulties in arranging transition of insurance. In these cases, APRA would expect the RSE licensee to clearly identify and document why it is in the members’ best interests to delay the transition and when and how they intend to move the members’ accrued default amount to a suitable MySuper product.
A: Under s. 29WA of the Superannuation Industry (Supervision) Act 1993, RSE licensees will be required to pay the contributions of all members into a MySuper product unless a member gives the RSE licensee an election in writing that the contribution is to be paid into one or more specified choice products. Section 29WA applies to contributions received on or after 1 January 2014. Prior to that date, RSE licensees will be able to continue paying contributions into non-MySuper products.
A: A member can choose to have amounts other than accrued default amounts transferred into a MySuper product within an RSE by member consent, subject to the governing rules of the fund. Amounts may also be transferred without member consent in accordance with the governing rules of the fund, provided there is appropriate disclosure to the member in advance.
Amounts other than accrued default amounts can only be transferred to another fund in accordance with the provisions of SIS Regulations r. 6.29.
A: For RSEs with only one investment option, that option is the default investment option. From 1 July 2013, accrued default amounts within the RSE must be transferred to a suitable MySuper product before 1 July 2017, unless the member opts out of the movement to a MySuper product and specifies the existing single option as their preferred investment option.
From 1 January 2014, unless the RSE licensee is authorised to offer a MySuper product, the RSE will not be able to receive default employer contributions. It will only be able to accept contributions from members who have chosen the RSE and nominated the single investment option as their preferred investment option.
The RSE will need to comply with all elements of Prudential Standard SPS 410 MySuper Transition.
A: The RSE licensee may choose to start accepting relevant contributions into MySuper from the date of authorisation or 1 July 2013, whichever is the later, but must place all relevant contributions into My Super from 1 January 2014.
A: Yes, MySuper products within the same fund can have different single diversified investment strategies.
A: There can be no pension offered or paid from a MySuper product and so the member would need to be moved out of the MySuper option. However, there is no legislative or regulatory barrier to a pension product having the same underlying investment strategy as a MySuper product.
A: No. If an RSE licensee offers a lifecycle investment strategy, the RSE licensee may vary the method of crediting investment returns to a member's account only on the basis of the member’s age (and other factors if prescribed, see s. 29TC(2) of the Superannuation Industry (Supervision) Act 1993). It will be a matter of fact which stage of the strategy a member is in at any point in time and therefore no member choice is permissible.
Note: These FAQs are published for discussion purposes only. The content of these FAQs is not legal advice. Users are encouraged to obtain professional advice about the application of any legislation or prudential standard to their particular circumstances. Users should exercise their own skill and care when relying on any material contained in the FAQs. APRA disclaims any liability for any loss or damage arising out of any use of or reliance on these FAQs.