Passing Protecting Your Super costs should be fair: APRA

APRA expects superannuation funds to do the right thing by members when recovering the costs associated with implementing the Protecting Your Super reforms.

The prudential regulator recently updated its Frequently Asked Questions page, urging trustees to keep in mind the best interests of members and treating them fairly as they roll out the change.

It acknowledges that implementing the changes will incur costs that need to be recovered via other avenues.

"In this regard, APRA would expect that RSE licensees would recover these costs in a manner that is in accordance with its duties to members, whether that is by making changes to fee structures or via (in the short term) the use of an appropriate reserve," APRA said.

As part of the reforms, APRA clarified that the 3% per annum fee cap for balances less than $6000 applies at the product level.

Many industry stakeholders asked if pensions, paid-up whole of life and endowment products are also subject to the fee cap.

APRA confirmed all products that are not defined benefit interests are subject to the fee cap.

If trustees fail to have the right fee-cap structure in place by 1 July 2019, they should refund excess fees that have been charged over the 3% - no matter how small the amount.

If members change super funds part way through the year, APRA expects that a trustee will endeavour to refund the excess fees no later than three months after leaving the fund.

As for insurance within inactive accounts, APRA reminded trustees that this is to be provided on an opt-in basis only.

"On and after 1 July 2019, trustees must stop providing insurance that is provided under a product to any member who has not opted in and whose product has been inactive for a continuous period of 16 months or more.

"Trustees need to continue to monitor member accounts and to provide written notice to members in cases of nine, 12 and 15 months of inactivity, with removal of insurance being required after 16 months of inactivity (unless the member opts-in)," APRA said.

Read more: APRA
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