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Timeline for Putting Members’ Interests First Bill
With Royal Assent for the Putting Members’ Interests First Bill expected within days, AIST has produced a timeline to help funds with meeting the key requirements of the Bill.
During Parliamentary debate on the Bill, more than ten amendments were proposed, including different approaches to the exemptions of people in dangerous occupations, and various commencement and other dates.
While opt-in insurance applies to new members under the age of 25, and all low-balance members from 1 April 2020, the legislation requires funds to undertake various activities well before then.
AIST’s timeline outlines the key communication requirements and relevant dates of the Bill. This timeline will be updated if any further communication requirements are included in the PMIF Regulations. These regulations have not been issued in either final nor draft form, and ASIC may also issue communications guidance.
AIST will shortly distribute a document to our super fund members containing the key elements for communications regarding the changes. AIST is currently seeking regulatory clarification on some inconsistences in the wording between the requirements of the Bill versus those of the Explanatory Memorandum.
For further information, please contact AIST senior policy manager, David Haynes at email@example.com
New ATO app to replace AUSkey
The ATO has written to super fund trustees about transitioning from AUSkey to the Government’s new digital identity solution, myGovID.
The myGovID system is a way to authenticate and access online services using an app. The intent is to strengthen the security of tax and superannuation systems in response to increased risks posed by the exchange of sensitive information between parties.
The transition to replace AUSkey by myGovID in March 2020 is already underway. Funds are advised to set up myGovID on their devices and obtain a link to the Government’s new Relationship Authorisation Management service.
Many funds have two AUSkeys - one for the trustee and one for the fund – with different authorised users for each. For example, authority to use services such as SuperTick (which is mandatory for rollovers in SuperStream) will be under the fund AUSkey rather than the trustee AUSkey. Funds should also review their staff AUSkey permissions and business appointments.
AIST is engaging with the ATO to receive more information on key supporting technology for the transition. We are asking that the ATO confirm its plans for the outstanding deliverables. For example, limitations on the use of myGovID challenge a rollout on an enterprise-wide basis.
APRA’s ‘traffic light’ system to put spotlight on poor outcomes: Byres
APRA chair Wayne Byres has shed more light on APRA’s plan to grade funds with a traffic light system.
In a speech delivered last week in Sydney, Mr Byres said the new system would add pressure on trustees to address persistent underperformance or reconsider their continued presence in the industry.
With APRA having already commenced discussions with trustees on the system, Mr Byres said change was already occurring with reduced costs for several funds, or in about half the cases, those funds being wound up.
Starting with MySuper products, APRA will publish a selected set of performance-related measures and benchmarks. Its initial focus will be investment returns, fees and charges and measures of sustainability/viability. It will then expand its analysis to cover insurance costs.
“No doubt there will be fierce complaints – particularly from those at the wrong end of the scale – that the data is wrong, the metrics we use are wrong, or that the benchmarks we choose are wrong,” Mr Byres said.
“Our view is: let’s have the debate. We do not intend to issue pass/fail marks to trustees. Nor will their status hinge on a particular metric beating a particular benchmark.
Rather, we will be looking to highlight those funds who seem to persistently, across a range of metrics, produce poor returns and who, looked at in various ways, appear to have high costs. It is important to stress we are looking at the issue of member outcomes holistically.
Debate about the merits of a particular data point or metric are therefore far less important when we are looking at the broader picture. A single measure is inevitably going to be imperfect. Consistently poor outcomes across a range of measures will be more difficult to defend.”
AIST supports APRA’s enhanced focus on fund performance but we remain concerned that the regulator has delayed its assessment of the Choice sector, where the issue of underperformance is greatest.
Flagging a major overhaul of APRA’s superannuation data reporting regime to improve coverage, granularity and consistency of data, Mr Byres said the regulator would inevitably be more prescriptive.
“If in this day and age a trustee cannot reliably, accurately and quickly provide information on assets, returns, fees and costs for all their products across a range of dimensions, and including in relation to key service providers, one wonders how they will meet heightened standards for assessing the outcomes being delivered for their members,” he said.
Hospitality funds to officially merge on November 1
Hospitality industry funds Hostplus and Club Super have moved towards completing their merger with the signing of a Successor Fund Transfer Deed and a 1 November 2019 transfer date.
Club Super Chair Sharron Caddie said the merger of the funds served as a practical example and demonstration that member best interests were at the forefront of decision making by both boards.
“In executing the Successor Fund Transfer Deed, we are actively helping to bring enhanced services and benefits to our members and employers, while continuing to recognise and support the community and sporting clubs they work so tirelessly in,” she said.
The news follows a busy year for fund mergers, with First State Super and VicSuper also currently in talks to create one of the largest funds in the country as well as discussions between MTAA Super and Tasplan continuing. Funds to have merged in 2019 include Sunsuper/Austsafe and NGS Super/QIEC.
APRA extends timeline for margin requirements by 12 months
APRA has amended a prudential standard relating to the margin requirements for non-centrally cleared derivatives.
The changes to Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives will apply to all authorised deposit-taking institutions, general insurers, life insurers and registrable superannuation entity licensees.
Amongst a number of minor changes, the amendments also accommodate a change in implementation date to 1 September, 2021.
26 September 2019