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Issue 822, 1 September 2021 
In this issue: 


Your Future, Your Super performance test 

APRA has released the results from the inaugural MySuper performance test, introduced as part of the Government’s Your Future, Your Super (YFYS) reforms. APRA has assessed 76 MySuper products that have at least 5 years of performance history and found that 13 failed to meet the objective benchmark. 

APRA Executive Board Member Margaret Cole said that while 84 per cent of products passed the performance test, APRA remains concerned about those members in products that failed: 

“Trustees of the 13 products that failed the test now face an important choice: they can urgently make the improvements needed to ensure they pass next year’s test or start planning to transfer their members to a fund that can deliver better outcomes for them. 

APRA has intensified its supervision of trustees with products that failed the test and has requested they provide a report identifying the causes of their underperformance and how they plan to address them. Trustees have to monitor their products closely and report important information to APRA – including relating to the movement of members and outflow of funds.” 

Trustees of failed products are required to write to members by 27 September, advising them of their performance test outcome and providing the details of the ATO’s YourSuper comparison tool. 

As well as scrutinising the plans of the funds that failed the performance test, APRA is engaging with trustees at risk of failing the test next year to ensure they take the steps necessary to improve performance. APRA is also seeking to understand funds’ contingency plans, which must include pre-positioning to be able to give effect to an orderly transfer of members to another fund, if required. 

From 1 July 2022, trustee directed products will also be subjected to the performance test.  


Closure of SCT: Committee inquiry into transitional provisions Bill 

As reported in ASFA Action issue 821, the Government has introduced into Parliament a Bill containing transitional provisions addressing the closure of the Superannuation Complaints Tribunal (SCT) and its replacement by the Australian Financial Complaints Authority (AFCA) as the external dispute resolution body for superannuation 

The Treasury Laws Amendment (2021 Measures No. 7) Bill 2021: 

The Bill has now been referred to the Senate Economics Legislation Committee for inquiry and report. 

If you have any feedback you would like ASFA to consider in relation to the Bill, please forward it to Julia Stannard by close of business Monday 6 September. 


Virtual meetings and electronic document execution: consultation 

As reported in ASFA Action issue 819, legislation was recently passed to extend temporary relief measures ensuring that ensure companies can validly execute documents electronically and conduct virtual meetings. At the time, the Government indicated it would seek to introduce permanent reforms later this year to give companies the flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents. 

Treasury has now released an exposure draft of legislation to give effect to this announcement. The draft legislation contains permanent reforms to facilitate the use of technology in meetings, to execute documents and send meeting-related materials. The draft legislation seeks to make permanent the relief which has been provided on a temporary basis since the start of the COVID-19 pandemic. 

Treasury is seeking submissions on the exposure draft by Friday 10 September. 

While not specific to superannuation, these reforms are relevant to the way in which superannuation trustee companies manage their general obligations under the Corporations Act 2001. 


Remuneration: final prudential standard published 

APRA has released its final prudential standard CPS 511 Remuneration (see ASFA Action issues 783, 734 and 717 for background). The prudential standard is designed to strengthen remuneration practices across the banking, insurance and superannuation industries. 

APRA first consulted on CPS 511 in 2019, before releasing an updated draft CPS 511 in November 2020. CPS 511 will commence for registrable superannuation entity (RSE) licensees that are classified as significant financial institutions (SFI) on 1 July 2023 and for other RSE licensees on 1 January 2024. An SFI is an RSE licensee that has total assets in excess of $30 billion.  

The finalised prudential standard will require: 

APRA has also released a response paper outlining feedback from industry and stakeholders during the recent consultation on CPS 511. The response paper also sets out APRA’s response and finalised requirements, expectations for implementation and regulatory impact analysis. 

The Government is also expected to introduce into Parliament during the Spring sittings legislation to implement the Financial Accountability Regime (see ASFA Action issue 814 for background).  


ASIC industry funding model: model to be reviewed and temporary relief for advisers 

The Government has indicated that Treasury will next year review the ASIC industry funding model, to ensure it remains fit for purpose in the longer term. The funding model determines how ASIC’s regulatory costs are recouped from the various sectors, including superannuation funds and financial advisers. 

The review was foreshadowed as part of an announcement that the Government will temporarily reduce the cost recovery levies charged by ASIC in relation to personal advice provided to retail clients, to “help ensure Australians can continue to have access to affordable and professional financial advice”. The relief will see ASIC levies charged for personal advice to retail clients restored to their 2018-19 level of $1,142 per adviser for the next two years (2020-21 and 2021-22), with the flat per licensee charge remaining at $1,500. This represents a substantial reduction relative to the level estimated in ASIC’s 2020-21 Cost Recovery Implementation Statement (CRIS) of $3,138 per adviser. (See ASFA Action issue 815 for background on the consultation on ASIC’s CRIS.) 

The Government has noted that the reduction in the levy will “provide financial advisers with the certainty they need over the next two years to deal with the impacts of COVID-19 and further regulatory reforms making their way through the Parliament, including the introduction of a Single Disciplinary Body and a Compensation Scheme of Last Resort”. 


APRA Super Data Transformation: FAQs and updates 

As reported in recent ASFA Actions, APRA recently finalised ten reporting standards under phase 1 of its Superannuation Data Transformation project. APRA has been publishing frequently asked questions (FAQs) for registrable superannuation entity (RSE) licensees ahead of the first submission of data under the standards on 30 September. 

APRA published additional FAQs on the phase 1 standards on 27 August, including an update to a worked example relating to data in SRS 706.0 Fees and Costs. 


Improving the visibility of super assets in family law proceedings 

A Bill containing reforms to facilitate the identification of superannuation assets by parties to family law proceedings has been passed by the House of Representatives without amendment and now awaits consideration by the Senate. 

The reforms — contained in the Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 — are intended to implement a commitment made by the Government in late 2018 as part of the Women’s Economic Security Statement. See ASFA Action issue 819 for background in relation to the Bill. 


Streamlining requirements for actuarial certificates: funds fully in retirement phase 

A Bill containing measures to remove a requirement for some superannuation funds to obtain actuarial certificates when calculating their ‘exempt current pension income’ (ECPI) has been passed by the House of Representatives without amendment and now awaits consideration by the Senate. 

The amendments, contained in the Treasury Laws Amendment (2021 Measures No. 6) Bill 2021, will effectively remove the requirement for superannuation trustees to obtain an actuarial certificate when calculating ECPI where all members of the fund are fully in retirement phase for all of the income year. The measure partially implements a commitment from the April 2019 Budget. See ASFA Action issue 819 for background in relation to the Bill. 

The ECPI rules provide a fund with a tax exemption on the income derived from assets that support payment of the fund’s current pension liabilities. ECPI may be calculated using either a proportional method (supported by an actuarial certificate) or via the segregation of assets. 


APRA Corporate Plan 2021-25 

APRA has released its Corporate Plan 2021-2025, highlighting its strategic priorities around the key themes: protected today, prepared for tomorrow. 

Some aspects of particular relevance to superannuation include confirmation that APRA will: 

APRA will also continue its focus on cyber resilience across the whole financial system and its initiatives to transform governance, culture, remuneration and accountability across banks, insurers and superannuation trustees. 


ASIC Corporate Plan 2021-25 and statement of expectations/intent 

ASIC has published its Corporate Plan 2021-25, highlighting its priorities over the next four years to achieve a fair, strong and efficient financial system for all Australians. 

ASIC has also published a new Statement of Intent detailing how it intends to meet a new Statement of Expectations issued by the Government. 
ASIC’s four external strategic priorities are: 

The Plan highlights both external and internal projects and commitments to ensure ASIC delivers on its statutory objectives. 




ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations

and other regulatory announcements relevant to superannuation.

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