- AIST Policy News - 16 Mar 2017
AIST Policy News
ATO flags new approach to fund reporting
The ATO is reviewing the frequency that super funds report contributions to them. As part of this review, the ATO is undertaking a project to manage the convergence of this new approach to fund reporting with ongoing Superstream implementation; the implementation of the Budget tax measures; and Single Touch Payroll.
All these initiatives may have a significant impact on the operation of super funds and AIST is committed to ensuring their implementation is not only cost-effective and transparent, but also in members’ best interests.
While AIST sees the merit of MyGov showing more up-to-date balance information, any change needs to be introduced over a reasonable time frame in a staged approach and in close cooperation with the super industry.
We are also concerned that the rollout of Single Touch Payroll could lead to unintended consequences for funds, particularly in relation to new employee registration and the effective transfer of responsibility for some reporting from employers to super funds.
The ATO is releasing details of this new approach to fund reporting on 6 April via the Superannuation Industry Engagement Forum.
For further details email David Haynes, AIST’s executive manager, policy at firstname.lastname@example.org
Default fund debate set to take centre stage
The debate on default fund selection is moving to centre stage with the draft report on alternative default models expected to be released by the Productivity Commission in the final week of March.
This follows the release by the Commission of an issues paper in September last year which examined alternative models for a formal competitive process for allocating default fund members to products.
In our response to the issues paper, AIST reiterated the need for the highest level of consumer protection around default fund selection, noting that funds currently named in default funds within modern awards had generally outperformed over the short, medium and long term.
AIST continues to question the need to change the existing merit-based default selection process administered through the Fair Work Commission. AIST will be responding to the next draft report and seeking member feedback.
The Productivity Commission is expected to hand a final report to the Government by August 2017, after which the Government is required to table the report in each House of Parliament within 25 sittings day.
New figures on $450 monthly threshold show 1 in 5 women affected
New data from an AIST-commissioned Essential Media poll has found that as many as one in five women currently have a job that pays less than $450 a month.
This is nearly twice the number of men affected by the threshold limit, with the highest proportion of women affected between the ages of 18 and 35 years old. Nearly half (42%) of women earning less than $450 a month from one employer are not receiving super.
Under current legislation, employers are not obliged to pay the Superannuation Guarantee if the employee is paid less than $450 a month. A number of submissions to the Senate Inquiry into Superannuation Guarantee non-payment – including the submission from AIST – called for the removal of the threshold.
AIST Acting CEO Eva Scheerlinck said that super should be universal and the $450 monthly threshold needed to go, particularly as modern payroll systems made it easier for employers to meet their obligations.
“We need to remove all barriers that prevent women saving enough super for a dignified retirement,” said Ms Scheerlinck. “With the increasing casualization of the workforce, the $450 monthly threshold will continue to impact on both women and men – many of whom are low income earners and need all the super they can get.”
A news article published across Fairfax publications this week reported that the $450 monthly threshold was based on a $5,200 a year figure which was the tax-free threshold in 1992 when superannuation began.
The Essential Media poll was conducted online from the 2nd to 5th February 2017 and is based on 1,014 respondents.
Call for submissions on super account erosion due to insurance
The Insurance in Superannuation Working Group (ISWG) has released the first of a series of discussion papers as a first step towards extending the Life Insurance Code of Practice to superannuation trustees.
The paper, Account balance erosion due to insurance premiums, examines how to address the issue of members paying for cover they don’t need through having multiple super accounts. A further two discussion papers are due to be published in coming weeks.
The ISWG is identifying changes that can improve superannuation member value and protections. Work priorities include:
- Reducing benefit erosion on superannuation account balances for members, including establishing the right level of automatic cover for young people and low income earners;
- Reducing inappropriate multiple insurance policies;
- Providing better and more timely assistance to members during claims;
- Improving superannuation fund member communications on insurance;
- Improving data standards to improve service to members; and,
- Undertaking independent research on the costs and benefits of group insurance within superannuation.
The ISWG is committed to improving consumer value and experience. The paper asks for submissions from stakeholders on the proposed solutions to balance superannuation contributions allocated to saving for retirement versus automatic insurance benefits.
Industry and stakeholder feedback will help shape an enforceable Code of Practice and Good Practice Guidance for Trustees, to be published by the ISWG later this year.
How to make a submission - Submissions should be sent to ISWG-PMO@kpmg.com.au no later than 7 April 2017.
The next discussion paper will be on claims handling.
For further information contact the Insurance in Superannuation Working Group Chair, Jim Minto via email@example.com
Call to remove barriers preventing women from a dignified retirement
AIST and Women in Super have called on the Government to implement recommendations from the Senate Inquiry into economic security of women in retirement.
In a media statement released on International Women’s Day, AIST and WIS called for the Government to start enacting recommendations from its report into the economic security of women in retirement – ‘A husband is not a retirement plan: Achieving economic security for women in retirement’.
The report recognises a number of reasons behind the super gender gap.
- implement policies to address the gender pay gap, which is the fundamental cause of the gender gap in retirement (recommendations 1 to 6),
- guarantee adequate levels of income and housing support for older Australians who do not have adequate superannuation or housing (recommendations 8 and 18),
- abandon the proposal to increase the age pension age to 70 (recommendation 17),
- provide superannuation guarantee payments for people on paid parental leave and carer’s payments (recommendation 9),
- remove the superannuation exemption for employees earning less than $450 per month (recommendation 14), and
- provide a gender analysis of all proposals in relation to retirement income (recommendation 15).
ATO develops tax and super resources for schools
The Australian Tax Office (ATO) is helping teachers add tax and super to their classes this year with a series of dedicated educational resources.
In partnership with the Australian Curriculum, Assessment and Reporting Authority (ACARA) and the Australian Securities and Investment Commission (ASIC), the ATO has developed resources that align to the Australian Curriculum for students in years 7 to 10.
Tax Super + You is a free online teaching resource that uses animated, visual and interactive elements designed to appeal to students.
Topics include an introduction to the tax and super system, why you need a tax file number, preparing to enter the workforce or study, an overview of superannuation and more.
Schools can also request an in-school presentation or interactive webinar.
Call for Mother’s Day Classic corporate teams
The Women in Super Mother's Day Classic is calling for industry leaders to inspire and engage staff for an important cause that impacts just about every workplace.
An estimated 40 Australian women are diagnosed with breast cancer each day - the more we raise, the faster a cure can be found.
MDC is looking for CEOs and senior leaders of Australian businesses to take up the Corporate Challenge and inspire their organisations to make a difference on Mother's Day.
This year on Sunday, May 14 the Mother’s Day Classic fun walk/run turns 20 years old. As the major fundraiser for the National Breast Cancer Foundation, the MDC has contributed more than $30 million to breast cancer research.
There is no excuse for missing out on the 20th anniversary of this family friendly event.
To enter a team visit: http://www.mothersdayclassic.com.au/register/ and for inspiration, click on this video of WIS Victorian chair and Industry Initiative Manager at Link Group, Melissa Birks, who has been involved with the MDC event for 13 years.