AUSTRALIA -Plans to introduce a levy on regulated supers to help recompense members is unfairly favourable towards larger funds, industry bodies claim.
Both the Association of Superannuation Funds of Australia (ASFA) and the Australian Institution of Superannuation Trustees (AIST) have made submissions critiquing a A$55m (US$58.1m) levy on regulated superannuation funds to recompense superannuation fund members that lost money due to the collapse an investment manager.
In this year's budget, the government proposed the levy to pay the victims defrauded in the collapse of Trio Capital in 2009. Investors lost an estimated A$100m in the collapse, but the government proposed only reimbursing those members who lost money through an Australian Prudential Regulation Authority (APRA) regulated mainstream superannuation fund, while "DIY" investors remain uncompensated.
ASFA and AIST both support the levy as a means of maintaining confidence n the superannuation system, but expressed concern that the levy calculation would result in an unequal distribution of the cost of the levy.
The proposed legislation would apply a levy of 0.0001977% of funds under management, with the levy capped at AU$500,000.
"AIST also notes that the maximum amount cap permits larger FUM funds to contribute proportionately less than smaller balance funds and consideration should be made towards a different method of calculation, for instance member numbers, so that the levy is more equitable between individual fund members," AIST said in its contribution.
ASFA pointed out in its submission that the levy would mean inequitable distribution of costs over member base - a fund with A$5bn AUM would have their levy capped at A$500,000. If that fund had 750,000 members, the levy payable by each member would be AU$0.67. For a fund with A$1bn AUM, the levy is A$197,700. If that fund had 15,000 members, the levy would be A$13.18 per member.
"Whilst we recognise that no formula will generate completely identical outcomes for members of different funds, ASFA contends that the formula proposed in the draft legislation will have particularly negative consequences for members of some funds. As such, we believe the proposed formula should be revisited to ensure more equitable outcomes between all superannuation fund members."
ASFA suggested raising the proposed levy cap and lowering the applicable rate.
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