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Conference of Major Super Funds 2020 cancelled
Due to COVID-19 (Corona virus) being declared a pandemic by the World Health Organisation, AIST has accordingly cancelled CMSF 2020, which was scheduled to take place in Adelaide 18-20 March.
AIST announced the decision on 12 March, saying the health and safety of delegates, staff and industry partners was our priority and it was in the best interests of all to not proceed with CMSF.
For any enquiries please call 03 8677 3800
Choice bill could see some members worse off
AIST this week appeared before the Senate Standing Committee on Economics in Sydney to argue that the Your Super Your Choice Bill should not be supported due to concerns that some members will be worse off.
AIST is concerned that the current drafting of Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 has the potential to prejudice interests of some super fund members as it puts at risk the additional superannuation benefits, such as higher super than SG, enjoyed by many employees covered by EBAs.
The Bill will amend the Superannuation Guarantee (Administration) Act 1992 to prevent Enterprise Bargaining Agreements nominating only one superannuation fund in a workplace.
Click here for a link to a transcript of the hearings.
More ASIC guidance needed on DDO: AIST
While AIST has broadly welcomed ASIC’s proposed guidance on the design and distribution obligations (DDO) we have several concerns, including an overlap with APRA’s Business Performance Review requirements.
In a submission, AIST notes that no guidance has yet been provided on managing the overlap with APRA Business Performance Review (BPR) and legislated annual outcomes assessment requirements.
Other concerns include:
Although MySuper products and employers complying with certain Superannuation Guarantee obligations are exempt from the obligations, AIST has also raised concerns about the inclusion of employers as a distribution channel in one of the examples in the draft regulatory guidance.
The obligations commence 5 April 2020 and will apply to both:
The consultation paper acknowledges the interaction with member outcomes and states that these are separate but complementary obligations whilst also stating they will consider whether specific guidance on the interaction between member outcomes and design and distribution obligations is required.
Whilst AIST supports trustees having flexibility to appropriately navigate the two regimes, AIST has advocated that additional guidance would be beneficial and would need to be provided as soon as possible to provide funds with adequate time to implement.
It is expected that final guidance will be issued mid-2020. For further information, please contact AIST’s Policy Analyst, Zach Tung at email@example.com
Proportion of workers over 65 doubles
Statistics from the ABS have shown the number of employed people 65 years and over, between 2006 and 2016, doubled from 2 percent to 4 percent of all employed people.
The statistics published in Australians' journeys through life: Stories from the Australian Census Longitudinal Dataset are taken from Census data dating back to 2006.
The data shows that almost three quarters of this group of older people who continued to work were male with around two thirds reducing the number of hours worked over the ten-year period.
The data also found that people were more likely to work past the age of 65 in the agricultural industry and in regional areas.
The ABS flagged that they would release longitudinal data regarding Australians moving from renting to home ownership in the coming weeks.
Govt moves to expand contribution laws for over 65s
The Government has released a draft Bill to extend super contributions for people over 65, with the measures providing more options to people working past retirement age to contribute to their superannuation.
The Draft Bills seeks to amend the Superannuation Industry (Supervision) Regulations 1994 to allow people aged 65 and 66 to make voluntary contributions without meeting the work test.
It is also proposed that people aged 70 to 74 be able to receive spouse contributions by increasing the maximum age from 69 to 74 years.
In addition, people under 65 years of age can currently make up to three years of non-concessional contributions under the bring-forward arrangements. The draft Bill would amend the Income Tax Assessment Act 1997 to extend access to the bring-forward arrangements to people aged 65 and 66.
AIST supports measures that allow working Australians to continue contributing to their retirement savings to achieve better financial security in retirement.
Submissions on the draft legislation are due 3 April 2020. For further information, please contact AIST’s Policy Analyst, Zach Tung at firstname.lastname@example.org
ASIC seeks feedback on financial advice legislative instruments
ASIC is seeking feedback on draft legislative instruments that deal with advice fee consent, independence disclosure and ongoing fee arrangements.
The legislative instruments – outlined in ASIC consultation paper 329 released this week - are based on the Government's exposure draft legislation for reforms arising from the Financial Services Royal Commission recommendations.
The instruments set out the requirements proposed for:
CP 329 also seeks feedback on additional issues relating to ongoing fee arrangements, including renewal notices and fee disclosure statements.
ASIC notes that the final form of these instruments is subject to change depending on the form of the enabling legislation, and the feedback received in response to CP 329.
The deadline for feedback 7 April, 2020.
RBA optimistic on economy post virus
The Australian economy is well placed to bounce back quickly once the Coronavirus is contained, according to the RBA.
In a speech delivered in Sydney this week, RBA Deputy Governor Guy Debelle, outlined the bank’s thinking on the impact of the virus on the Australian and global economy, education and tourism sectors, supply chains, the resources sector, financial markets, our banking system, and monetary policy.
While noting there was too much uncertainty to assess the impact of the virus beyond the March quarter, Mr Debelle predicted the Australian economy would be “well supported by low interest rates, the lower exchange rate, a pick-up in mining investment, sustained spending on infrastructure and an expected recovery in residential construction” once the virus reached an end point.
While Australia’s service exports and financial markets had taken a hit in the March quarter, Mr Debelle said iron ore and coal prices had been resilient due to disruptions to Chinese domestic production of iron ore and coal.
The Bank is anticipating that the Chinese policy response post-virus will involve a significant amount of infrastructure spending which will also benefit bulk commodities.
Mr Debelle said a 10 per cent drop in Australia’s service exports – roughly split between tourism and education – would see GDP growth about 0.5% lower in the March quarter.
United call for super on paid parental leave
AIST, ISA, Women in Super and other groups have ramped up their advocacy for super to apply to paid parental leave during International Women’s Day celebrations.
In a media release on International Women’s Day, AIST called for the Federal Government to prioritise women’s economic outcomes and address major shortfalls in retirement income.
AIST CEO Eva Scheerlinck said it was grossly unfair to penalise women who were typically the primary carers in their family.
“Not only do they miss out on workplace participation and wages, but then at the end of their working lives they are expected to live on less retirement savings and are at greater risk of living in poverty,” she said.
Industry Super Australia released figures showing the super gap for average workers aged 55 to 59 years old currently sits at 40.4 per cent, leaving men retiring with $90,000 more in their super on average.
Women in Super chief executive Sandra Buckley said there had been structural inequities in the super system that failed to consider women's working patterns and lower incomes.
"A growing number of women older than 55 face the dilemma of a poverty-stricken retirement, as a result of caring for others," Ms Buckley said.
The Australian Nursing and Midwifery Federation also included calls to pay super on Parental Leave as part of its submission to the Retirement Income Review, saying the effect of years of less or no income due to giving birth and raising children was "significant and ongoing" in super.
"Payment of superannuation when on paid and unpaid parental leave would be a significant reform to alleviate the cumulative effect of periods of unpaid leave in working life.
Additional measures raised by AIST and others to combat the super gender gap include removing the $450 monthly earnings threshold on super payments and fast-tracking women onto 12% Superannuation Guarantee.
Greater gender diversity produces higher returns
Super funds with gender-diverse boards generate better investment returns, according to the new research from Rainmaker.
Figures released on International Women’s Day last week show that superannuation funds with a high proportion of women in leadership positions outperformed male-dominated funds by 0.6% p.a. over three years on average.
"This outperformance may seem small, yet compounded over a member's working life it can translate into tens of thousands of extra dollars in your superannuation account," said Alex Dunnin, executive director of research at Rainmaker.
Rainmaker cautioned that there was still much to be done to improve gender diversity within super funds, saying that, on average, four in 10 of the trustees overseeing MySuper products were women.
“But the ratio of funds having a woman as chair or CEO was only about half of this, and an even smaller proportion have women as their fund’s chief investment officer,” Mr Dunnin said.
Industry super fund first to pledge support for low-carbon transition initiative
Health care and community services industry fund, HESTA, HESTA has become the first Australian investor to pledge support for the Transition Pathway Initiative (TPI) – a global asset owner-led initiative that assesses companies’ preparedness to transition to a low-carbon economy.
HESTA CEO Debby Blakey said the TPI would further inform the investment processes and decisions of large asset owners like HESTA and provide additional insights to support active ownership activities.
The TPI provides help to investors to understand how companies are managing climate change and the risk it poses to their businesses.
Profit-to-member superannuation funds in Australia have a good track record of engagement on global climate action, with several AIST member funds signing up to the Investor Group on Climate Change (IGCC) and Climate Action 100+.
13 March 2020