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As outlined in the Your Future, Your Super package of reforms the ATO has launched the Your Super comparison tool for MySuper products.
The new tool, which currently allows individuals to compare the 6 year net return and annual fee for MySuper products, was launched today can be accessed via www.ato.gov.au/yoursuper
Individuals can either access it via an authenticated version by logging into ATO Online via myGov, or via an unauthenticated version. The authenticated version allows the user to see all their current super accounts and last reported balance as well as having fields like age and account balance prepopulated. The fees are calculated on the individual’s last reported balance
In the unauthenticated version the fees column is based on a default balance of $50,000. If the user enters their age and account balance the tool will adjust the results to show the fees based on that balance and the lifecycle products that apply to that age group.
The tool does not yet contain information about APRA performance testing as this will not occur until August this year, accordingly all products show as ‘Not Assessed’ in the Investment performance column. Once APRA has completed their performance determinations this field will be updated. The time period for the net return will extend to 7 years once 30 June 2021 data is made available in September.
The ATO has distributed an information pack on the tool.
AIST, ASFA and the Financial Services Council (FSC) have today announced that the Voluntary Insurance in Super Code is being replaced by guidance to superannuation trustees on improving outcomes for vulnerable members and guidance on claims handling for members with life insurance in group superannuation.
These two new guidance documents maintain or enhance valuable components of the Insurance in Superannuation Voluntary Code of Practice (the Voluntary Code), with most the other components of the Code having been overtaken by recent legislative and regulatory reforms.
This includes the ‘Protecting Your Super’ and ‘Putting Members’ Interests First’ reforms which require trustees to cease insurance cover on inactive accounts, prevented superannuation funds from automatically providing insurance to members where the member has a low balance, and not provide cover where the member is under 25 years.
APRA’s updated Prudential Standard SPS 250 on insurance in superannuation is also expected to require trustees to have a strategy to prevent insurance premiums from eroding the retirement income of beneficiaries, in conjunction with the requirement on trustees to conduct a ‘member outcomes’ assessment that includes insurance arrangements.
Importantly, the new guidance will ensure that consumer protections are maintained in areas which are not currently covered by legislation and regulation.
Looking after the insurance needs of vulnerable members is of critical importance, particularly in light of the challenges many members still face as the national economy recovers from the COVID-19 induced economic downturn.
ASFA, AIST and FSC who jointly own the Voluntary Code have recently consulted superannuation trustee members about further protections for vulnerable consumers and the new guidance to trustees incorporates this feedback and goes beyond the statutory framework to help them to continue to improve member outcomes for this important cohort of consumers.
The guidance will help trustees meet consumer expectations, and help members by setting out the level of service they should expect from their superannuation fund when making a claim on their life insurance.
A large proportion of AIST members have already implemented the Voluntary Code and the decision to replace the voluntary code should not delay, halt or otherwise impact these important initiatives.
APRA and ASIC have released the public notes from their inaugural Superannuation CEO Roundtable.
The April 30 Roundtable, hosted by APRA Deputy Chair Helen Rowell and ASIC Commissioner Danielle Press, was attended by a mix of 11 super fund CEOs, six of them from the profit-to-member sector.
The roundtable – which looks set to become a bi-annual event - focused on the implementation of SPS 515 Strategic Planning and Member Outcomes and Product Design and Distribution Obligations (DDOs).
In response to various issues raised by the CEOs about the challenges in applying the legislation, APRA and ASIC said they were keen to work with the industry on data governance and management and to refine the measurement of member outcomes.
ASIC encouraged trustees to take a holistic approach to the DDOs, noting that could be benefits in applying this thinking across all their products, particularly where products share key features such as insurance.
ASIC confirmed that clearing houses are caught by the DDOs, but welcomed views from the industry on this. Note : AIST, with input from members, provided a submission to ASIC outlining the reasons why clearing houses should be excluded from DDO obligations.
APRA confirmed that it will shortly be releasing a discussion paper focussing on trustee reserving and resilience, which will touch on the trustee indemnity changes which take effect on 1 January, 2022.
APRA and ASIC have published a joint letter to RSE licensees providing further guidance on oversight of advice fee payments from superannuation accounts.
Recent legislative changes limit advice fee deductions from superannuation accounts in response to Recommendations 2.1, 2.2, 3.2 and 3.3 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Sector (Royal Commission). The letter sets out the regulators’ expectations about the oversight of these arrangements.
The letter also sets out detailed information on the meaning of ‘advice fees’, and it outlines specific issues for trustee decision-making, assurance processes and system functionality.
APRA and ASIC highlight their findings of failures in trustee oversight leading to financial adviser misconduct, and note that appropriate risk management practices by trustees is paramount.
AIST has previously outlined its support for these measures, in particular the value of non-ongoing advice.
Earlier this week, AIST along with several superannuation funds met with APRA to discuss the impending expense reporting obligations (SRS 332.0) under Phase 1 of APRA’s Superannuation Data Transformation program.
The meeting sought to bring together funds and the prudential regulator to discuss existing challenges raised by the industry in relation to the expense reporting form APRA is introducing.
APRA acknowledges the challenges faced by the new reporting regime, and is open to working closely with AIST and its members to provide further guidance and clarity on the requirements. APRA has invited AIST to another meeting to continue discussions, with the next meeting to be held on 12 July 2021.
Last week, AIST facilitated a webinar presented by Scott Charaneka and Holly Marchant from Thomson Geer on the incoming breach reporting obligations effective from 1 October 2021.
The webinar delved into what the new regime means for superannuation trustees, the drivers of the incoming changes, and key considerations arising with the new regime.
AIST members can access the complimentary webinar and the presentation through the AIST member portal.
In preparation for incoming reforms on reportable situations (formerly breach reports), AFS licensees and Australian credit licensees will be required from 1 October 2021 to submit reportable situations to ASIC via the approved form in the ASIC Regulatory Portal.
The form will feature mandatory fields designed to help licensees comply with their obligations. AIST notes superannuation funds should check their access and who can view reportable situations.
More information, including quick reference guides and instructional videos, can be found here.
Preliminary data from the ABS’s 2020-21 Survey of Income and Housing has revealed that the average amount withdrawn by people who accessed the scheme twice was $16,377.
Under the scheme, eligible individuals could access up to $10,000 of their superannuation in the financial year 2019-20 between April 2020 and 30 June 2020, and could apply for access for another $10,000 between 1 July 2020 and 31 December 2020.
The ABS data shows that the main use of funds accessed through the COVID-19 early release of superannuation program by the end of December 2020 was either paying their mortgage or rent (31%) or for household bills (29%). Only 8% of people added it to their savings.
Other key findings from the survey were that that total average property assets increased from $653,700 per household in December 2019 to $731,100 in December 2020.
The release this week from Treasury of the 2021 intergenerational report highlights the critical and pivotal role of compulsory superannuation in ensuring Australia is well placed to support its rapidly ageing population.
Importantly, the report shows that our retirement income system is economically sustainable, with the number retirees drawing a full-age pension expected to halve by 2060.
The report projects that the combined total of Age and Service Pension expenditure and superannuation tax concessions will grow from around 4.5 per cent of GDP in 2020-21 to 5.0 per cent of GDP in 2060-61. This is well below expenditure on pensions across OECD countries, where on average public pension expenditure is projected to increase to 9.4% of GDP in 2050.
AIST is calling on Parliament to act quickly to pass the long-awaited legislation that is critical in preventing family violence perpetrators from hiding their superannuation assets when they are going through the family law courts.
In a joint submission* with five other organisations who strongly support the legislation, AIST congratulated the Government for moving to implement the ATO information sharing measure outlined in the Bill and emphasised the need for its swift passage through Parliament and urgent implementation.
The information-sharing measure in the Bill will allow information about superannuation assets to be provided directly to the Family Court by the ATO during property settlement. This will have a significant positive impact by removing the cost, administration and time barriers which currently make it difficult for applicants to gain full visibility of superannuation assets, and cause many to walk away from their entitlement.
*The submission on the exposure draft Treasury Laws Amendment (Measures for Consultation) Bill 2021: Superannuation information for family law proceedings was jointly prepared by AIST, HESTA, Women’s Legal Service Victoria, Women in Super, Financial Counselling Australia and Economic Abuse Reference Group.
The final report of the Treasury review of the Australian Financial Complaints Authority (AFCA) is now due by 13 August 2021.
This follows an extension to the prior deadline of 30 June 2021 to allow completion of an expert assessment on a selection of cases obtained during the consultation process.
The report will be tabled in each House of the Parliament within 15 days after being provided to the Minister. More information on the review can be found here.
AIST’s submission calls for further enhancements to be made that will contribute to AFCA operating efficiently and ensure complaints are resolved in a fair, efficient, timely and independent manner.
The Government has released amended regulations for minimum drawdowns and other minor changes in super law.
These regulations amend the Retirement Savings Accounts Regulations 1997 and the Superannuation Industry (Supervision) Regulations 1994 to extend the temporary reduction in minimum payment amounts for account based pensions, allocated pensions and market linked pensions (and for the equivalent annuity products) by half for the 2021-22 financial year.
These regulations include amendments relating to the refund of excess balance fees.
The ATO has released an updated Superannuation and Employer Obligations Strategic Map current at 30 June.
Stay up-to-date on the current status of superannuation Bills currently before Parliament here.