Super funds want ‘confidential’ access to family law super changes

Superannuation funds are seeking detail of the Government’s proposed changes to Family Law Superannuation regulations on super splitting while acknowledging that divorcing couples may change their behaviour if the arrangements become public.

The Association of Superannuation Funds of Australia (ASFA) has responded to a consultation paper issue on the changes arguing that superannuation funds should be provided with advanced information on a confidential basis.

ASFA said it welcomed the review and update of the regulations which had been in place for 20 years because the superannuation sector had undergone a considerable evolution.

However, it raised the issue of funds needing greater detail.

“We acknowledge the concern that publishing the new and updated methods and factors so far in advance of their commencement may influence parties’ behaviour, and it is possible that parties may seek to either delay or expedite their settlement depending on whether the methods and factors in the existing or new FLS Regulations provide them with a more favourable outcome,” ASFA said.

“However, the absence of any detail regarding the new default factors and methods makes it extremely difficult for funds to provide meaningful feedback on their appropriateness. It also means funds are unable to assess their suitability for their particular product offerings and determine whether they can be adopted or if the fund will need to apply to the Minister for approved factors and methods,” the submission said.

“Finally, it creates a risk that there will be insufficient time to implement the changes in a measured way, if the new FLS Regulations are published close to their commencement date.”

“ASFA has requested that the Attorney-General’s Department considers allowing impacted superannuation funds to obtain detail about the proposed new and updated methods and factors under a confidentiality agreement, and we encourage the Department to provide such access if possible.,” it said.

ASFA is also arguing that the new regime be introduced no earlier than 1 April, next year.

“ASFA is strongly of the view that once finalised, the new FLS Regulations should commence no earlier than 1 April 2025,” it said. “Considerable lead-time will be needed for funds and their administrators to update systems and processes, and this cannot commence until there is some certainty as to the final content of the Regulations – a matter that is particularly relevant given the exposure draft omits significant detail around new and updated default methods and factors.”

“We note that the industry would typically require 12 months to implement changes of this magnitude in a measured manner allowing for completion of implementation and testing. Instead, the industry may – depending on when in the final quarter of 2024 the Regulations are finalised – have only three to six months to implement these changes.”