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Govt extends COVID early release of super until 31 December
The Morrison Government has announced an extension to the application period for the Temporary Early Release of Super Scheme.
The announcement - part of the Government’s Economic and Fiscal Update released today – will extend the second tranche of the scheme from 24 September 2020 to 31 December 2020.
The Government says the extension will increase the scope for individuals who may still be financially impacted by COVID-19 to access early release in the coming months.
Eligible Australian and New Zealand citizens and permanent residents were able to access up to $10,000 of their superannuation before 1 July 2020. They can access a further $10,000 until 31 December 2020. This change does not impact eligible temporary visa holders who were only able to apply for a single release of $10,000 before 1 July 2020.
Latest APRA figures
Earlier this week, APRA reported that early release applications have now reached 2.8 million, with more than 580,000 applications in the week ended 12 July, of which 470,000 were repeat applications.
Additional super developments announced today
In addition to extending the temporary early release of super scheme, today’s Economic and Fiscal Update contained additional super announcements, including revised start dates for various pieces of legislation and the deferral of the retirement income covenant.
Retirement income covenant
The Government is deferring the commencement of the Retirement Income Covenant, announced in Budget 2018-19, from 1 July 2020 to 1 July 2022 to allow continued consultation and legislative drafting to take place during COVID-19. This will also allow finalisation of the measure to be informed by the Retirement Income Review.
Eligible rollover funds & voluntary transfers to ATO
The Government will amend the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020 which enacts the measure Superannuation — facilitating closure of eligible rollover funds first announced in the 2019-20 MYEFO. The amendment will:
The Government will also provide $4.7 million over four years to the ATO to administer amounts transferred voluntarily.
Changes to SMSF member numbers
The start date for the 2018-19 Budget measure Superannuation — increasing the maximum number of allowable members in self-managed superannuation funds and small APRA funds from four to six has been revised from 1 July 2019 to the date of Royal Assent of the enabling legislation
Exempt current pension income changes
The start date for the 2019-20 Budget measure Superannuation — reducing red tape for superannuation funds (exempt current pension income changes) has been revised from 1 July 2020 to 1 July 2021
Sending lost and unclaimed super to KiwiSaver accounts
The start date for the 2015-16 Budget measure Cutting Red Tape – lost and unclaimed superannuation, to allow the ATO to pay lost and unclaimed superannuation amounts directly to New Zealand KiwiSaver accounts, has been revised from 1 July 2016 to six months after the date of Royal Assent of the enabling legislation.
Further ATO guidance on early release
As noted in an AIST Policy Alert earlier this week, the ATO has released three new FAQs advising super funds about what to do when a member changes their mind regarding an early release of super application, realises they are ineligible for the scheme or has concerns about personal information security breaches.
The first FAQ (23) outlines what a fund should do if an individual changes their mind and wants to return an amount that was released under the early release scheme.
The ATO says if an amount was released in accordance with a determination, and the member subsequently changes their mind and wants to return the amount to their super fund account, the amount paid to the fund will be a superannuation contribution.
If the member intends to claim a personal super contribution deduction, before claiming a deduction they should consider broader tax outcomes that may apply. Any tax benefit obtained in relation to such a deduction could be cancelled if the member enters a scheme mainly for the purpose of obtaining a tax benefit. If the member is concerned about their eligibility for COVID-19 early release of super, funds should encourage them to contact the ATO on 13 10 20 to discuss their situation.
The second FAQ (24) looks at what a fund should do if a member says they were not eligible for the early release scheme.
The ATO says If the member tells their fund that they do not think they were eligible for COVID-19 early release of super, the fund should advise the member to contact the ATO on 13 10 20 to discuss their situation as soon as possible. The ATO can then work with the member to determine whether they were in fact eligible based on their individual circumstances.
The third additional FAQ (25) looks at what a fund should do if a person thinks their personal information has been compromised.
The ATO says direct the member to more information on the ATO website page on identity security.
APRA releases Pandemic Data Collection guidance and corrects reporting due date
Ahead of the 31 July due date for the monthly and quarterly data under the Pandemic Data Collection project, APRA has released FAQ’s for trustees covering investments, member switching, insurance cancellation and more.
The new FAQs provide a general overview into APRA’s Pandemic Data Collection (PDC) project, including super funds that are not required to report on the collection; when the project will be reviewed; due dates for reporting;
APRA has stated that the purpose of the PDC is to:
The FAQs also outline information on how to report foreign currency hedging, Life, TPD and Income protection insurance, as well as false claims made under the Early Release Initiative (ERI).
APRA has also confirmed that the due date for submitting the 30 June 2020 return is 31 July 2020 and not 21 July 2020 as previously stated in an incorrectly sent overdue notice.
APRA has advised trustees to disregard the overdue notice that was sent in error. For any queries please contact [email protected]
APRA warns funds to prepare early for member outcome assessments
APRA has written to super funds reaffirming its expectations regarding two key regulatory requirements aimed at improving outcomes for superannuation members.
In the letter, trustees are reminded of their obligations to undertake a Business Performance Review (BPR) by 31 December 2020, and an outcomes assessment by 28 February 2021, that are commensurate with the complexity of their operating models and diversity of their product offerings.
APRA says that over the past year it has consistently encouraged RSE licensees to engage early with it on the design of their BPR and the outcomes assessment, given the level of complexity involved in complying with these requirements.
But APRA says there has been a low take-up of this offer and is concerned that the lack of trial outcomes assessments being shared with it may be indicative of a lack of preparedness by the industry.
The regulator notes there are numerous considerations that RSE licensees need to work-through in order to fulfil these obligations, and the complexity in doing so will be commensurate with the complexity of RSE licensees’ operating models and diversity of their product offerings.
APRA reiterates the imperative to prepare early for these assessments, adding that it will support the effective implementation of the outcomes assessment and the BPR by providing clarity on issues raised through publishing responses to frequently asked questions, where appropriate.
Calls for Govt to deliver on promised family law super reforms
AIST, together with the Women's Legal Service Victoria and Women in Super have today called on the Federal Government to deliver on a promised scheme that would have stopped family violence perpetrators hiding their superannuation assets when they are going through the family law courts.
The $3.3 million Government scheme, announced in November 2018 as part of the Women's Economic Security Statement, aimed to give women a better chance of accessing their share of superannuation assets after separation, and improve their long-term financial wellbeing.
Although the life-changing scheme was due to begin on July 1 this year, the Government has not yet delivered it.
In an interview on ABC radio, AIST CEO Eva Scheerlinck said the current process of uncovering non-disclosed super in a family law dispute needed an overhaul.
“In many cases, enquiries need to be made to a multitude of funds leading to many women simply giving up the search.
“Allowing the courts to access ATO data is a simple measure that will make the process far more efficient, fair and cost-effective both for the individuals concerned and the super industry.”
Further changes to Insurance in Super Code
A third version of the Insurance in Superannuation Voluntary Code of Practice has been released with changes to the restarting of insurance cover provisions.
The Code was updated in March 2020 to align with the Protecting Your Super and Putting Members’ Interests First legislation and make sure it remains clear, relevant and focused on improving standards for insurance in super.
However, the operation of recommencement of cover provisions required further consideration in the light of this legislation and differing views on its impact.
The revised restarting of cover provisions in the Code (sections 4.21 to 4.24) have now changed to broaden flexibility for how trustees restart cover.
It is worth noting that the passage of Enforceable Industry Code legislation and changes to regulatory requirements (such as changes to the APRA Insurance in Superannuation Prudential Standard) would require further changes to the Code.
The Code Review Committee continues to meet on a regular basis to keep the Code relevant and up to date.
Version three of the Code is published on the AIST website and became effective from July 2020.
For any questions relating to the Insurance in Super Code, please contact David Haynes AIST Senior Policy Manager [email protected].
Minor amendments to RG97
ASIC has issued ASIC Corporations (Amendment and Repeal) Instrument 2020/579 which makes minor amendments in relation to fees and costs disclosure requirements in RG97.
The legislative instrument confirms the previously communicated deferral of transitional arrangements for Product Disclosure Statements (PDSs).
The transitional arrangements now require any PDS given on or after 30 September 2022 to comply with the new disclosure regime whilst allowing entities to opt-in into the new disclosure regime earlier from 30 September 2020.
Following consultation with industry, ASIC has also made other minor amendments, including:
For further information please contact AIST’s Policy Analyst, Zach Tung at [email protected]
NSW leads decline in permanent job opportunities
Sunsuper’s latest Australian Job Index reveals NSW has suffered the most significant decline in permanent job opportunities (32.4%) in recent months while Victoria recorded the largest fall in contingent hiring (down 33.8%).
Despite some gains in May and June, the index remains 40.3% below its January 2020 level. The strongest performing sector over the June quarter was mining, construction and utilities, reporting a decline of just 3.2%. Retail and wholesale job opportunities reported the largest decline (down 45.9%).
As with most other sectors, the early contraction in financial and insurance services opportunities was substantial (57.2%); however, June saw quite a significant bounce back of 38%.
Deadline approaches for AIST vulnerable members survey
The deadline to complete the vulnerable members online survey – a joint initiative between AIST, ASFA and the Financial Services Council - is fast approaching.
AIST would like to hear from as many funds as possible so that we can ensure that the changes we make to the code reflect as much of the superannuation sector as possible.
The Insurance in Super Voluntary Code of Practice requires funds to have policies to help vulnerable members, and the development of these policies are part of Code transition plans.
The survey – emailed to the member funds of AIST - is due to close by COB on Friday, 24 July.
If you have any questions or concerns, please do not hesitate in contacting David Haynes at [email protected] for more information.