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APRA has today released the final reporting standards requiring performance and other data for the year ending 30, June 2021 for some, but not all, super products. The data being collected will be used to develop and expand Heatmaps, and to support performance assessments.
The reporting standards reveal that reporting will only be required for MySuper products and Trustee Directed Products (TDPs) for this financial year. Data for all other regulated products will be required to be collected for the following 2021/22 financial year. It is still unclear what products are considered “Trustee Directed Products” – a term that is used in the Your Future Your Super legislation, currently before Parliament. TDPs may be defined in as yet unreleased regulations to this legislation.
AIST has long advocated that all regulated super funds (both MySuper and Choice) should be held to the same level of performance assessment and we do not support carve-outs or delays for Choice products.
Other changes in the final reporting standards include:
The reporting standards also contain details of transitional arrangements and the regulator’s response to stakeholder consultations in which AIST has been – and will continue to be - heavily involved.
AIST’s submission to the Senate Economics Legislation Committee on the Your Future Your Super legislation is now available online.
As outlined in last week’s policy news, our submission calls on the Government to re-think the Bill, pointing out that it will not achieve its stated intent and should not proceed.
Our submission to the Senate Economics Legislation Committee details where the Bill significantly deviates from Productivity Commission and Royal Commission findings and recommendations, highlighting that key measures in the Bill are either un-tested or lack evidence to back them.
ASIC has released commentary on its assessment during 2020 on the support provided by superannuation trustees to their members during COVID-19. This work included reviewing how trustees communicated to members about issues related to COVID-19, and the provision of intra-fund advice.
ASIC found that trustees were quick to resolve any issues were raised with them about their public COVID-19 communications. This included issues concerning a significant number of website projection tools that estimated retirement balances and highlighted the impact of accessing superannuation early. The regulator also found that intra-fund advice provided during this time was consistent with previous assessments of the quality of intra-fund advice provided by superannuation funds.
ASIC however did note that while most super fund websites contained accurate information about legislative and economic changes, many lacked detail about how members’ insurance through their superannuation might be affected if they chose to access their super early, or if their employment status changed because of COVID-19. Several websites had inaccurate or incomplete information about insurance eligibility in superannuation if an ERS payment resulted in a low account balance, it noted.
ASIC further identified projection tools on 14 websites “that could have discouraged members from applying for the ERS because the tools used assumptions that exaggerated the long-term impact of withdrawal.”
ASIC also noted there was limited information about scams on fund websites.
Regarding intra-fund advice on the ERS, ASIC did not identify any evidence of trustees inappropriately using intra-fund advice to discourage members from applying for the ERS.
As part of checking the support trustees provided to members in relation to insurance issues, ASIC requested samples of insurance related intra-fund advice. Of the 18 files collected, eight were assessed as complying with the best interests’ duty and related obligations. The remaining files were assessed as non-compliant because of issues with procedures and record keeping. It did not identify any serious consumer detriment.
ASIC have indicated that they expect their Claims Handling INFO sheet to be released by the end of March and their Revised Anti-Hawking guidance and consultation to be released in late April.
ASIC has this week released advice fee consent and lack of independence disclosure legislative instruments. This follows Royal Assent of the Financial Sector Reform (Hayne Royal Commission Response No.2) Act 2021 earlier this month.
In finalising the legislative instruments, ASIC took into account industry feedback on the proposals in Consultation Paper 329 Implementing the Royal Commission Recommendations: Advice fee consents and independence disclosure (CP 329), which was released in March 2020.
REP 687, which was also released this week, highlights the key issues raised in submissions to ASIC on CP 329 and details ASIC’s responses on those issues.
In his opening statement to the Senate Economics Legislation Committee, Wayne Byers, Chair of APRA identified the regulators key areas of focus in relation to superannuation.
APRA will be aiming to improve member outcomes through four key channels:
He stated that their efforts had seen an improvement in governance, lower fees, poorer performing funds exiting the industry and consolidation to achieve economies of scale. He identified that there was still more to do in relation to underperformance and that APRA had issued notices to eight trustees in relation to the continuing underperformance of 10 MySuper products.
Treasury will be undertaking a review of the Australian Financial Complaints Authority (AFCA) and has invited interested parties to lodge submissions as part of a consultation round.
Treasury held a roundtable in which AIST participated along with AIST member superannuation funds, whose input has been used to develop AIST’s submission.
Submissions are due tomorrow 26 March 2021. Terms of Reference can be found here.
AIST has called on the Government to prioritise their promised family law super scheme in the wake of the welcome announcement earlier in the week that a second controversial measure - to allow family violence victims to access their super - has been abandoned.
While AIST welcomes the Government’s decision to abandon the measure to allow domestic violence victims fleeing their abusers to access up to $10,000 from their superannuation accounts we are now seeking assurance that a much-needed super data sharing scheme that will assist women has not been abandoned or put back on the back burner. The Government last week announced that both superannuation measures would be introduced on the same piece of draft legislation.
The data sharing scheme was announced more than two years ago by the Government in its 2018 Women’s Economic Statement but remains unimplemented. This follows the Women’s Legal Service Victoria report which identified that the lack of visibility of super assets during family law proceedings was exacerbating the financial hardship experienced by many women.
The data sharing scheme will make superannuation assets more visible when they are going through the family law courts by allowing the sharing of superannuation data between the courts and the ATO.
Early withdrawal of superannuation savings should only ever be a temporary measure of last resort, the World Pension Alliance (WPA) has warned.
The warning is contained in a new report by WPA on how pension funds around the world dealt with the challenges of the COVID pandemic. WPA – of which AIST is a member - is a global advocacy body for more than 5000 not-for-profit pension funds managing the retirement savings of around 400 million people.
The report highlights that while COVID saw some countries allow pension fund withdrawals such schemes “should not be considered as an alternative for obtaining short-term resources.”
“One can consider withdrawal of pension funds due to an exceptional situation, but only as a temporary measure of last resort. And withdrawal must be accompanied by clear and explicit mechanisms for recovering withdrawn funds,” the WPA notes.
AIST CEO Eva Scheerlinck who was appointed Vice Chair of the WPA in 2019 said the report highlighted how the pension fund response to the COVID crisis varied considerably from country to country and across pension type.
While pension withdrawals were permitted in some countries including Australia, others such as Canada did not allow withdrawals for registered pension plans. Where early withdrawals were allowed, limits were generally applied although these also varied. While the US allowed pension fund withdrawals of up to USD $100,000 from defined contribution plans, many Latin American countries limited withdrawals to 10 per cent of the individual’s funds.
AIST has called for the upcoming May Federal Budget to include a one-off Government contribution to the super accounts of low-income earners who accessed their super early and met the eligibility criteria. The contribution would be based on the proportion of balance withdrawn and no more than $5000. “Addressing the COVID super gap will not only ensure Australians aren’t penalised in retirement for a crisis that they had no control over, it will also reduce the extent to which they are required to rely on the taxpayer-funded age pension in retirement,” Ms Scheerlinck said.
The current status of superannuation Bills currently before Parliament can be found here.
25 March 2021