Growing uncertainty about fate of YFYS legislation
The fate of the Government’s Your Future, Your Super legislation remains uncertain as various crossbenchers spoke publicly this week about their concerns with the Bill.
While the legislation was listed for debate before the House of Representatives on each sitting day of this week, no debate has occurred.
While it is still possible for the Bill to pass the House either in this sitting of Parliament or during mid-June when both houses are sitting, the Bill is widely expected to meet resistance in the Senate, where it needs the support of three crossbench senators. With every week that passes, the Bill’s scheduled start date of 1 July looks increasingly unworkable.
Meanwhile, AIST has completed a submission on the draft regulations for the legislation, noting the regulations do nothing to allay our fears that the legislation will produce more consumer harm than good.
In a media release on the submission, AIST warns that, in addition to the legislation being overly reliant on regulations, the draft regulations themselves are silent on crucial issues impacting the retirement outcomes of millions of Australians.
Despite AIST’s support for the objectives behind the proposed changes, we remain convinced that fatal flaws within the legislation will result in significant unintended detriment to members.
To hear more about our concerns, click here for a video message from AIST CEO Eva Scheerlinck.
First Australians should have access to jobs with super on every dollar
As National Reconciliation Week gets underway, AIST is calling for jobs through the Federal Government's Community Development Program (CDP) to be replaced with jobs that pay superannuation.
In a media release this week, AIST raised concerns that the CDP - which operates across regional Australia with an estimated 80% of participants identifying as First Australians - denies participants workplace rights, including superannuation. Participants in the program do not receive superannuation nor other employment protections such as Award wages while they are employed in the program. These participants are required to work up to 20 hours per week without receiving super on the payments, while others working in non-CDP jobs doing similar work in the same communities do receive superannuation and Award wages and are building their retirement nest eggs.
Super pool hits record high as profit-to-member funds continue to outperform
A strong rebound across investment markets following the COVID slump saw superannuation assets rise 15 per cent to a record high of $3.1 trillion in the year to the March 2021 quarter.
APRA’s quarterly superannuation statistics released this week also show that profit-to-member funds continue to outperform, with the five-year annualised rate of return for industry funds at 8.4 per cent compared to 7.7 per cent for public-sector funds, 7.1 per cent for corporate funds and 6.7 per cent for retail funds.
Meanwhile, total contributions increased 0.8 per cent over the year to 31 March 2021. Over this period, employer contributions increased 3 per cent, of which Super guarantee contributions increased 5.4 per cent.
Member contributions declined by 7.3 per cent over the year, however positive quarter on quarter growth in personal contributions over the past two quarters indicate a return to long-term trend levels.
The data also shows that the strong preference for equities among APRA-regulated funds continues. As at the end of the March 2021 quarter, 54 per cent of the $2 trillion investments in APRA-regulated funds were invested in equities, with 27 per cent in international listed equities, 23 per cent in Australian listed equities and 4 per cent in unlisted equities. Fixed income and cash investments accounted for 29 per cent of investments, with 19 per cent in fixed income and 10 per cent in cash. Property and infrastructure accounted for 14 per cent of investments whilst other assets, including hedge funds and commodities, accounted for 3 per cent.
ASIC commences proceedings agains AMP for charging deceased customers
ASIC has commenced civil penalty proceedings in the Federal Court against five companies that are, or were, part of the AMP Limited group, alleging that these entities were involved in charging life insurance premiums and advice fees to more than 2,000 customers despite being notified of their death.
ASIC alleges that the AMP companies, including AMP Superannuation Limited and NM Superannuation Pty Ltd. received over $500,000 in insurance premiums from the superannuation accounts of deceased customers, with at least $350,000 charged between May 2015 and August 2019.
Additionally, it alleges that the AMP companies received over $100,000 in advice fees from deceased customer accounts, with at least $75,000 being charged between May 2015 and August 2019.
ASIC further alleges that the AMP companies’ conduct demonstrated a system of conduct or pattern of behaviour that was, in all the circumstances, unconscionable
ASIC is seeking declarations of contraventions of the ASIC Act and Corporations Act and is also pecuniary penalties and other orders to be made by the Federal Court.
New FAQ on superannuation data transformation
APRA has published additional frequently asked questions (FAQs) and worked examples on meeting the new Reporting Standards for Phase 1 of the Superannuation Data Transformation.
One FAQ (FAQ 1.2) has been updated to clarify reporting under Reporting Standard SRS 332.0 - Expenses.
APRA expects to provide more updates to FAQs in the lead up to the first collection of data under the new Reporting Standards on 30 September 2021.
Draft legislation on exempt pension income calculation
The Government last week released exposure draft legislation to streamline some administrative requirements for the calculation of exempt current pension income (ECPI).
The draft legislation provides choice for superannuation fund trustees to use their preferred method of calculating ECPI where the fund is fully in the retirement phase for part of the income year but not for the entire income year.
The draft legislation will also remove a redundant requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI, where the fund is fully in the retirement phase for all of the income year.
Stakeholders are encouraged to provide their feedback by 18 June 2021.
Super has more work to do on risk culture: APRA
APRA has warned super funds that more work needs to be done on risk culture.
In a speech at an industry event, Suzanne Smith, Executive Director of APRA's Superannuation Division said recent risk culture assessments by the regulator had revealed instances of immature risk cultures, an approach to risk management that has not kept pace with the growth and maturity of the organisation, sub-optimal board compositions including the lack of specific trustee capabilities, and conflicts of interest.
Reiterating that risk culture was a key focus of the regulator’s work and outlining “10 dimensions of risk culture” Ms Smith said that “tone from the top” – the words and actions of board and senior executives – was a key driver of culture.
“Nothing influences an institution’s risk culture more…Organisations that do this well have strong role models who champion the importance of risk culture and ensure good risk management is embedded across the business. They also have leaders who regularly monitor risk culture and take effective actions to address identified weaknesses, deal proactively with poor risk outcomes and aim to mitigate risks from manifesting,” Ms Smith said.
Click here for the full speech and an outline of APRA’s 10 dimensions of risk culture.
ASIC files criminal charges against ME Bank
ASIC has announced today that it has filed criminal charges in the Federal Court against ME Bank.
In a short statement, ASIC said the charges relate to alleged contraventions of sections 12DB(1)(g) and 12GB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) and sections 64(1) and 65(1) of the National Credit Code (Cth), between 2 September 2016 and 3 September 2018.
The regulator said a court date had not yet been set for the matter, which was being prosecuted by the Commonwealth Department of Public Prosecutions following referral from ASIC.
ME Bank, previously owned by a group of Industry Super Funds, was recently acquired by Bank of Queensland.
AIST’s weekly update on the status of legislation
Stay up-to-date on the current status of superannuation Bills currently before Parliament here.