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With the release of regulations for the Your Future Your Super reforms expected later this month, AIST has warned that the treatment of administration fees in proposed performance testing must be reflective of member outcomes. Read more
AIST is concerned that since the Federal Government amended the YFYS legislation to include fund administration fees in APRA’s performance testing of MySuper products, some stakeholders are now proposing that current or recent admin fees – rather than historic fees – should be used when calculating past performance.
AIST has long advocated for all fees to be included in the performance testing and that includes historic fees. As AIST’s senior manager, policy, outlines in this recent article, given historic investment returns are being used in the tests, it is entirely appropriate and relevant to use historic administration fees.
APRA is requesting feedback from industry regarding the timeframes needed from when regulations are finalised to when Trustee Director Products (TDPs) need to be classified by funds. AIST will continue to work closely with member funds to provide APRA with this feedback. Read more
TDPs were among a broad range of issues covered in a workshop on Superannuation Data Transformation held yesterday.
It was noted that the external test environment for APRA Connect has been released, with a go-live date of 13 September 2021. APRA confirmed that no scheduled changes were taking place to APRA Connect, but took comments on board in relation to system design concerns.
APRA also sought to address a range of queries on the expense reporting standard (SRS 332.0) including issues relating to apportionment (purpose for which the expense is used), accruals (alignment with accounting standards), and differentiation between marketing expenses. APRA has taken questions on notice to be addressed through FAQs and additional information will be available on APRA’s slides, which AIST will circulate when they are released.
APRA also confirmed a new batch of worked examples relating to expense reporting are to be released next week, noting that any further requests for specific guidance or worked examples should come with a proposed approach.
In a separate meeting also held this week between AIST and member fund representatives, APRA took on notice questions in relation to Annual Member Meeting (AMM) requirements, look through requirements with custodians and capital expenditure. Additionally, APRA noted that its intention regarding director fees was to capture any payments to a body or organisation.
APRA and AIST are meeting again next week to discuss outstanding queries on expense reporting. For further information contact AIST policy and regulatory analyst, Carlos Lopez at firstname.lastname@example.org.
AIST has highlighted the need for APRA to play a key role – alongside the Government - in the oversight of proposed critical infrastructure legislation, which applies to both physical and digital assets.
Appearing before last week’s Parliamentary Joint Committee on Intelligence and Security on the Review of the Security Legislation Amendment (Critical Infrastructure) Bill 2020, AIST’s senior manager policy, David Haynes said while AIST supported an enhanced regulatory framework to protect critical infrastructure, any superannuation obligations should align with existing regulatory frameworks as far as possible and appropriate.
“In the case of superannuation, the obligations in the legislation – rather than just the rules - should specifically reference APRA as the relevant Commonwealth body,” Mr Haynes said.
“This should be in relation to identification of critical superannuation assets, reporting of incidents, and annual reporting of supply chain risks.”
Mr Haynes noted that APRA’s existing prudential framework, and prudential standards, provided the basis for regulatory compatibility. These include CPS 321 (Outsourcing), CPS 232 (Business Continuity), CPS 234 (Cyber-security), and SPS 220 (Risk Management).
“Not only would this mean that the framework was consistent with existing industry requirements in order to reduce regulatory burden and therefore cost to fund members, it would also allow it to evolve in an efficient manner, while achieving the desired security outcomes. Having to amend the rules every time there was a change in a prudential standard would be administratively burdensome, time-consuming, and inefficient,” Mr Haynes told the Committee.
AIST has also called for:
The Government has this week released a discussion paper consulting on reforms to strengthen the cyber security of Australia's digital economy.
Reforms under consideration include stronger cyber security standards for the digital economy, more transparent information about cyber security, and stronger legal remedies for consumers.
Minister for Home Affairs Karen Andrews said with Australian businesses and consumers more active online than ever before, opportunities for cyber criminals to target Australians are increasing.
Interested stakeholders are invited to make a submission by 27 August 2021 or register for a briefing session.
The consultation comes as the Australian Institute of Criminology releases a new report which puts the total economic impact of cybercrime on individuals in the Australian economy at $3.5 billion, including $1.9 billion lost by Australian victims.
Australia's superannuation funds have delivered their best annual financial year returns in 34 years, according to research from Rainmaker Information.
The Rainmaker Default MySuper Index is set to post 2020-21 financial year returns of 18%, after all fees and taxes. The only time superannuation annual returns have beaten this was just before the 1987 stock market crash. Returns in the 1986-87 financial year peaked at 19%, only marginally ahead of this year's results. Driving returns were the 33% financial year return from listed property, 28% from both Australian and international shares and 20% from global infrastructure.
AIST will hold another workshop on 26 July on design and distribution obligations, which become effective from 5 October 2021.
The workshop aims to bring member funds together to discuss concerns raised during previous workshops, including matters concerning ‘reasonable steps’, ‘significant dealings’, and detail and development of Target Market Determinations (TMD).
In addition, a guest speaker from Deloitte will provide an overview of their experience in relation to design and distribution obligations.
AIST has previously met with ASIC to discuss queries raised by member funds, and the workshop will inform any future discussions that may be necessary. For any queries on design and distribution obligations, and if you wish to attend the workshop on 26 July 2021, please contact AIST policy and regulatory analyst, Carlos Lopez at email@example.com.
The transcript for the last week’s hearing of the House of Representatives Standing Committee on Economics into banking, superannuation and other financial services is now available.
Six AIST member funds along with three other funds appeared before the hearing, the seventh hearing to focus on superannuation since the Committee was formed.
Stay up-to-date on the current status of superannuation Bills currently before Parliament here.