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Policy News - 10 September 2020

Policy News

Profit-to-member sector faces grilling at fiery Parliamentary hearing

Representatives from the  profit-to-member super sector dominated the witness line up at today’s hearings of the House of Representatives Standing Committee on Economics, prompting Labor MP and the Committee’ deputy chair Andrew Leigh to label the hearings as a witch hunt against the industry fund sector. 

Appearing online before the Committee, ISPT, Industry Super Holdings, Mine Super, Hostplus, AMP, and Cbus responded to a broad range of questions covering ownership structures and their relationship to collectively owned vehicles, an implied lack of transparency in the funding of these vehicles; the impact of the early release scheme on fund liquidity; the impact of the pandemic on asset valuations; and the value of life insurance. There were also questions on investment returns, sponsorships and donations, fund staff remuneration, and fees paid to fund managers.

AMP was grilled by both Labor and Liberal Committee members on the appropriateness of company’s handling of sexual harassment claims against former AMP Capital CEO Boe Pahari. It was also asked about its attitude to whistle-blowing; fees-for-no service, and treatment of remediated former members it has not located

The day’s hearings were peppered with a number of fiery exchanges between Chair Tim Wilson and Deputy Chair Andrew Leigh. Labelling the hearings as “unbalanced”, Dr Leigh accused an “ideologically-driven” Liberal Party of conducting a “witch hunt” against the industry fund sector and attempting to derail the superannuation increase to the detriment of workers and future governments. Dr Leigh noted the dearth of retail funds (with the exception of AMP) called to appear before today’s Committee “was not a reflection of the findings of the Hayne Royal Commission which the committee was charged with following up on the findings of.” To date, the only retail funds to appear before the committee are IOOF, Nulis and AMP.  In contrast, AustralianSuper, Cbus, Hostplus, MineSuper, Rest, QSuper. ISA, IFM and ISH have all appeared.

Tim Wilson responded by insisting questions had been sent to retail funds as well. He accused Dr Leigh of misleading the Committee with regards to his concern about sectoral bias and that his “hysterical rants” were unfounded.

It was confirmed by Chair Tim Wilson that another hearing on superannuation is scheduled to take place before the end of the year and that future hearing would include Industry super funds, Retail super funds and Industry Associations.

Click here for AIST’s full summary of today’s hearings.

COVID’s impact on adequacy goes beyond the early release scheme: research

COVID has diminished prospective retirement outcomes for many Australians due to a range of factors, according to new research from WillisTowersWatson.

The research released last week says the impact of COVID goes beyond the government’s early release scheme which has seen a high number of Australians drain their accounts.

The research presents 12 representative cameos aged between 30 and 60 years with various earning levels to illustrate the spread of the impact. In addition to the obvious impact of the early release scheme on many people’s super, the analysis also considers the impact of periods of unemployment, including Treasury forecasts for an unemployment rate of up to 9.25% in the December quarter of 2020, the fall in super fund investment returns and also switching.

The research concludes that the events of 2020 will have a negative impact on the retirement outcomes for large numbers of Australians, whilst noting that for low income earners some of this will would be offset by higher age pension payments.

Early release applications update

The rate of applications to the COVID early release scheme for week ending August, shows 52,000 applications were received by funds for the week ending 30 August. This compares to 59,000 applications in the previous week.

Of the applications received by funds, 31,000 were initial applications and 21,000 were repeat applications. This the total number of initial applications is around 3.1 million and repeat applications are 1.2 million since the inception of the scheme. 

Since the scheme’s inception, more than 4.3 million applications have been lodged with the ATO, and $32.6 billion has been paid out.

APRA confirms second round of REM consultation

APRA has confirmed that a second round of industry consultations on the new remuneration standard CPS511 will commence before the end of the year.

APRA has told AIST the CPS511 consultation is expected to run over Christmas and be longer than the typical three-month timeframe. It is intended that APRA will start engagement on a Prudential Practice Guide at the same time.

In our CPS 511 submission in October 2019, AIST recommended that superannuation sector remuneration be treated differently from the rest of the financial sector given that variable renumeration is less common and that bonuses that are paid are paid in cash, not equity. APRA would not comment on whether this would be reflected in the new draft standard.

Payment Times Reporting Scheme - Online Survey Invitation

PricewaterhouseCoopers (PwC) has been appointed by the Government to assist with the development of technical guidance material for the Payment Times Reporting Scheme and has released an industry survey to aid its consultation process.

The survey aims to gain an understanding of common issues that have been identified in interpreting the scheme’s requirements; the guidance to be provided in respect of these issues; and to seek feedback on any additional issues or other matters that should be considered for inclusion in the guidance materials including the preferred format for the guidance.

PwC’s draft guidance document gives an overview to help businesses to comply with the new reporting requirements ahead of the scheme’s implementation, and covers eligibility criteria, reporting requirements, payment times report and compliance measures.

The Payment Times Reporting Scheme requires large businesses and their related entities, as well as government enterprises with a total annual income of over $100 million, to publicly report on their payment times and practices for their small business suppliers.

The deadline for survey responses is 12pm AEST 18 September. For queries or to provide more detailed feedback, contact kevin.pek@pwc.com. 

AIST is seeking clarity on what superannuation funds are captured by this legislation.

APRA updates trustees on superannuation data transformation project

APRA is extending the overall consultation period on its superannuation data transformation project by 11 weeks due to the impact of COVID on businesses.

In a letter to trustees, APRA said it is on track to release the final reporting standards early in 2021 and commence phase 1 data collection in September 2021. It plans to publish its first phase of data late in 2021.

Formal consultation commenced on 28 August 2020, with the consultation period on each topic paper closing at two-week intervals from 2 October.

Reporting on the third consultation package for the data project, APRA said the completed data project would enable enhanced analysis of member outcomes for both MySuper and Choice products.

APRA has also confirmed that the pilot data collection for this consultation is voluntary.

To further support communication of the data project, APRA intends to hold a series of webinars on the topic papers. Initiations to these webinars will be sent shortly to APRA’s superannuation prudential contacts. 

AUSTRAC to extend relief on Early Release of Super

AUSTRAC has confirmed that it will update the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2020 (No. 1) rule to reflect the extension of the Temporary Early Release of Super to 31 Dec 2020.

AIST understands the Rule is currently up for approval with the expected ETA for registration is Friday or Monday. AUSTRAC will send communication to reporting entities once it has been completed.

ATO confirm ERS apps will be processed over Christmas closedown

The ATO has confirmed that it will be accepting online applications through myGov right up until 11.59pm on 31 December 2020.

The ATO is proposing to have call centre staff available on business days only over the Christmas period to enable those who cannot access myGov to apply over the phone.

The ATO is currently working through the process by which approvals will be sent to the funds over that time. The ATO has said it will confirm these arrangements as soon as they are finalised. 

10 September 2020