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ASIC has issued a strong warning to all super funds that member communications about upcoming insurance changes must be balanced and accurate.
In a letter issued today outlining ASIC’s expectations about the way funds should communicate the Putting Members’ Interests First (PMIF) changes, the regulator indicates it will take a dim view of member communications that “cause concern, confusion or create an impression that the only option is to retain insurance”.
ASIC’s letter comes as the first round of PMIF notices to members - whose balances are less than $6000 and who hold insurance cover - are due by December 1. Additionally, ASIC says its warnings on insurance reform communications are relevant to member communications about inactive low balance accounts proposed to be transferred to the ATO.
ASIC recently revealed it was unimpressed with the way some funds communicated the insurance changes relating to the Protecting Your Super Package (PYSP) reforms, which came into effect on 1 July. The regulator is now considering enforcement action against some of these funds who failed to meet the needs of their members.
ASIC’s tips to getting the message right include:
Members interested in attending an AIST workshop to discuss the letter and its impact on member communications should contact AIST’s policy and regulatory analyst, Zach Tung, Ztung@aist.asn.au
APRA has released an update about the implementation of its new Data Collection Solution, which will the regulator’s current data collection tool.
The regulator is exploring alternative implementation approaches for the Data Collection Solution, having already extended the implementation timeline due to complexities identified in the design phase, additional scope, external dependencies as well as industry feedback.
APRA says a key challenge in the implementation of the data tool is the complexity of migrating all existing collections in their current form (which may create significant burden for some entities as extensive resubmission of past returns may be required), while ensuring the benefits of the new solution are realised.
AIST and other industry representative are meeting with APRA in Melbourne tomorrow for a workshop consultation on the implementation issues.
APRA will confirm the implementation approach and timeline in early 2020 once this review is completed.
Given the extended implementation timeline, APRA will ensure that D2A remains available so entities can continue to meet their reporting obligations.
Further information can be found on the APRA website: APRA is replacing D2A or contact firstname.lastname@example.org.
To recap for those who missed our policy alert yesterday, ASIC is deferring the first reporting date of Portfolio Holdings Disclosure (PHD) for 12 months to 31 December 2020.
Most superannuation trustees, as part of portfolio holdings disclosure requirements, must provide information about fund holdings on the fund website. The first reporting date to identify the holdings of the fund was to be 31 December 2019, with disclosure required on the trustee’s website no later than 90 days from this date. However, the regulations which set out the way in which this disclosure is to be organised have not been made.
ASIC said the deferral will “facilitate the Government considering and settling its policy position on the PHD requirements”, including making regulations to prescribe the content and format of disclosure.
ASIC has made the ASIC Corporations (Amendment) Instrument 2019/1056 which amends ASIC Class Order [CO 14/443] to take account of the deferral.
Yesterdays’s announcement marks the sixth starting date for the measure. The new start date of 31 December 2020 for the portfolio holdings disclosure is more than six years after the initial start date and almost eight years after the legislation was passed by Parliament.
The portfolio holdings disclosure rules were part of the MySuper legislation that was passed by the Labor government in November 2012.
In a media release issued yesterday, ASIC said it supported greater transparency about funds’ portfolio holdings and encouraged superannuation trustees to focus on designing website disclosure about holdings that is accessible and clear for their members. It noted that a number of funds had already taken steps to increase transparency about their portfolio holdings even in the absence of an explicit legislative obligation to do so.
Life expectancy in Australia has reached record highs with a boy born today expected to live to 80.7 years and a girl to 84.9 years, according to the latest figures released by the Australian Bureau of Statistics (ABS).
"Male life expectancy has increased by 0.2 years over the 2015-2017 to 2016-2018 period, and by 1.5 years in the past ten years. Female life expectancy has increased by 0.3 years during the same period, and by 1.2 years in the past decade," ABS Demography Director Beidar Cho said.
In recent years, life expectancy for males has improved at a faster rate than that for females. Around 50 years ago (1965-67), life expectancy at birth in Australia was 67.6 years for males and 74.2 years for females, a gap of 6.6 years. The gap has now narrowed to 4.2 years in 2016-2018. "Australians have a higher life expectancy than similar countries, such as New Zealand, the United Kingdom and the USA," Ms Cho said.
And for those Australians who make it as far as the traditional retirement age of 65 years, malescan expect to live a further 19.9 years and females a further 22.6 years.
Further details are in Life Tables, States, Territories and Australia, 2016-2018 (cat. no.3302.0.55.001). Australia, state, territory and sub-state information is also available for free download from the ABS website.
AIST has advocated for more clarity on how members that have previously made a severe hardship claim should be treated when considering if an account is an inactive low balance account.
Existing Superannuation (Unclaimed Money and Lost Members) Regulations 1999 are scheduled to sunset on 1 April 2020 and consequently Treasury has released draft regulations to ensure the ongoing operation of the lost and unclaimed money regime for certain products.
The draft regulations include two substantive changes to the previous regulations. The first is prescribing whereby an account will no longer be considered an inactive low balance account if certain conditions of release are met by a member, and the second is that interest will apply to the payment of unclaimed amounts in relation to inactive low balance accounts.
In response to the first change, AIST welcomes the clarification in provisions which prescribe conditions of release whereby an account will not be an inactive low balance account and therefore will not be payable to the ATO. However, we have concerns regarding insufficient clarity on how members who have previously made a severe financial hardship claim should be treated by an RSE licensee.
30 October 2019