On 20 March 2013 ASIC released Consultation Paper 203 (CP 203) that outlines proposed reforms to its policy on superannuation funds offering retirement estimates to members. As part of the reforms, superannuation funds will be able to include the age pension in a retirement estimate. ASIC confirms that it will not take regulatory action for providing misleading information if the retirement estimate uses the prescribed assumptions and methodology.
ASIC currently provides superannuation fund trustees relief from licensing, conduct and disclosure requirements for general and personal advice when providing retirement estimates for members.
When ASIC published Regulatory Guide 229 (RG 229) and Class Order [CO 11/1227] ([CO 11/1227]) in 2011, the intention was to encourage member engagement with their superannuation. RG 229 and [CO 11/1227] were to provide superannuation funds relief for giving members a broad estimate of the potential income available at retirement, taking into account their current account balance, impact of fees and assumptions about future contributions and earnings.
Superannuation funds have raised concerns about elements of RG 229 and [CO 11/1227] limiting their ability to rely on the relief. The inability to include the age pension when calculating a retirement estimate meant exclusion of a component of the post-retirement income that affects a large portion of superannuation fund members. The prescribed methodology for calculations include standardised assumptions about contribution levels and fund administration fees that may not be an accurate reflection of the member's actual circumstances and could potentially be misleading.
The reforms are designed to clarify ASIC's policy and assist superannuation funds in offering retirement estimates to their members.
CP 203 proposes amendments to RG 229 and [CO 11/1227] to:
The proposed reforms also make other amendments to:
The reforms are proposed to commence from 30 April 2013. This will allow superannuation funds to rely on the revised relief when providing retirement estimates to members in their 2012-2013 annual statements if they elect to do so.
The closing date for submissions on the proposals in CP 203 is 19 April 2013.
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