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Issue 696, 10 January 2019 
In this issue: 


Productivity Commission: final report on efficiency and competitiveness of superannuation system 

The Government has released the final report of the Productivity Commission from its review of the efficiency and competitiveness of the superannuation system. 

The report makes 31 recommendations for significant reform of the system, focused on ‘modernising’ the system to work better for members. These include: 


Default fund processes and outcomes tests: 




Products that meet members’ needs: 


Best practice fund governance: 


System governance: 


Implementation of recommendations: the Government should establish a steering group of departmental and agency heads to oversee the implementation of the report’s recommendations. [recommendation 31] 

The Assistant Treasurer has indicated the Government will carefully consider the recommendations and will await the final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, before finalising its response. 



Fee and cost disclosure: ASIC consultation 

ASIC has released a consultation package on proposed changes to the fee and cost disclosure regime for superannuation funds and managed investment schemes. 

The package includes Consultation Paper 308 Review of RG 97 Disclosing fees and costs in PDSs and periodic statements, which follows the release of Report 581 Review of ASIC Regulatory Guide 97:Disclosing fees and costs in PDSs and periodic statements in July 2018. Report 581 was prepared by an external expert Mr Darren McShane, which sets out recommendations and observations in relation to the fees and costs regime (see ASFA Action issue 652 for background). 

Consultation Paper 308 seeks feedback on: 

Comments on the CP 308, draft updated RG 97 and draft amendments to Schedule 10 are due by 2 April 2019. 

ASIC will undertake consumer testing of some of the proposed changes during the consultation period, so the fees and costs disclosure requirements can be finalised as soon as possible. Should the results of the consumer testing indicate substantial changes to any of the proposals may be required, ASIC will seek further feedback from industry before finalising the requirements. 

ASIC’s response to submissions on the consultation paper and conclusions from consumer testing released, a revised Class Order [CO 14/1252] and updated RG 97 are expected to be released in the second half of 2019. 

In the meantime, ASIC will extend its current compliance approach to the fees and costs disclosure requirements until the consultation process is complete and any changes to the requirements are finalised and in force. This means ASIC will not look to take action against a trustee or responsible entity if they are making reasonable endeavours to comply with the requirements in Class Order [CO 14/1252], RG 97, the Corporations Act 2001 and the Corporations Regulations and are not misleading consumers about fees and costs. 

If you have any feedback that you would like to provide to ASFA please forward it to Fiona Galbraith by close of business, Friday 22 February 2019. 



May 2016 Budget reforms: draft ATO ruling 

The ATO has issued a draft ruling on the calculation of an individual’s total superannuation balance (TSB). 

Draft Law companion ruling LCR 2016/12DCSuperannuation reform: total superannuation balance provides guidance on how an individual’s TSB is calculated from 30 June 2017. The TSB concept was introduced as part of the major superannuation reforms announced in the May 2016 Budget. 

LCR 2016/12DC is relevant for determining an individual’s: 

Comments on the draft ruling can be made directly to the ATO by 22 February. 



Proposed SG amnesty: ATO clarification of position 

As noted in ASFA Action issue 639, the Bill to implement the Government’s proposed amnesty for unpaid superannuation guarantee (SG) remained before Parliament at the end of the 2018 sitting year. The ATO has recently clarified its approach in relation to the amnesty. 

The Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018 provides for a one-off 12-month amnesty for unpaid SG, with effect from 24 May 2018 – the date the Bill was introduced into Parliament (see ASFA Action issue 672 for more details). The Bill has been passed by the House of Representatives but remains before the Senate. This has led to some questions about the status of the amnesty and the implications for employers who had voluntarily disclosed a SG shortfall in reliance on the amnesty. 

The ATO has published some information on its website to clarify its position in relation to the amnesty. In particular, the ATO notes that: 

Subject to the passage of legislation the proposed amnesty is intended to be available for 12 months from 24 May 2018 to 23 May 2019. 

If enacted, we will apply the new law retrospectively to voluntary disclosures made during this period. You will be entitled to the benefits of the amnesty for any SG shortfalls you’ve voluntarily disclosed to us – subject to the eligibility criteria. 



ASIC default fund: request for proposals 

ASIC is seeking proposals to select its next default superannuation fund for new choice-of-fund employees who have not nominated a fund. 

The Public Sector Superannuation accumulation plan (PSSap) is ASIC’s current default superannuation fund for new choice-of-fund employees. This arrangement expires on 30 June, when ASIC moves outside coverage of the Public Service Act 1999. 

ASIC has published background information, selection criteria and details on how it will evaluate proposals. Proposals must be received by 5pm (AEDT) on Friday 8 February. 



Income tax regulations: deferral of sunsetting 

The Government has made an instrument deferring the sunsetting (expiry) of important tax regulations, to allow greater time for them to be reviewed and replaced with updated regulations. 

The Legislation (Deferral of Sunsetting – Income Tax Assessment Regulations) Certificate 2018 defers the sunset date of the Income Tax Assessment Regulations 1997 (the Regulations) to 1 April 2021. 

The Regulations are made under the Income Tax Assessment Act 1997, which provides the main body of rules for the calculation of tax payable by individuals and entities—including superannuation funds—in relation to a financial year. 

The Regulations were due to sunset on 1 April 2019. The explanatory material to the deferral instrument indicates that the Regulations will be reviewed to ensure that they remain fit for purpose, are operating efficiently and effectively, and are drafted consistently with modern drafting practices. 

The explanatory material notes that a 24 month deferral of the sunsetting day will allow sufficient time for this review to occur. It will also avoid the need to remake the Regulations in their current form for a short period of time before they are expected to be repealed and replaced by new regulations arising from the review. 



SuperMatch: review of use of service 

The ATO has updated terms and conditions for its SuperMatch service, following a recent review of funds’ use of the service. 

Version 7.0 of the Terms and Conditions and User Guide for SuperMatch was released in mid-December, and the ATO has reportedly written to fund trustees to notify them of the changes. 

The ATO has stated that, during its review, it became apparent there have been misinterpretations of the SuperMatch terms and conditions and the addendum, which has led to trustee solutions not fully complying with the self-certification requirements. 

In particular, the ATO has concerns about the multifactor requirements for member authentication, consent and disclosure of results from SuperMatch searches. 

The ATO has also engaged with ASIC in ongoing collaborative work and information sharing looking at the use of SuperMatch and the associated disclosure. ASIC concerns include the lack of appropriate disclosure when seeking permission from members to use SuperMatch, and the failure to provide all of the response data provided by the ATO in the display of the results of the search. 

The ATO and ASIC will continue to investigate potential cases of misleading and deceptive conduct where trustees fail to obtain explicit consent from a member to perform a search and where trustees do not provide balanced information about the risks and benefits of consolidation. 

The ATO has reminded trustees of several key points for use of SuperMatch, including that: 

The ATO has asked trustees who have not contacted the ATO already, or are not currently working with the ATO, to undertake an assessment of their SuperMatch solution against the updated User Guide and Terms and Conditions. Where a trustee is unsure of its compliance, or identifies any misalignment, it should contact the ATO by the end of February. 



Updated sex discrimination guidelines 

The Human Rights Commission has published updated guidelines Guidelines: Special measures under the Sex Discrimination Act 1984 (Cth)in relation to ‘positive discrimination’ under sex discrimination legislation, with potential relevance to superannuation. 

Recognising that some deeply embedded barriers to equality remain pervasive in certain areas of public life, a ‘positive discrimination’ mechanism—known as ‘special measures’—was included in the Sex Discrimination Act 1984 (SDA) to enable individuals and organisations to take positive actions for the purpose of achieving substantive equality for disadvantaged groups. 

The SDA recognises that some groups, including women and lesbian, gay, bisexual, transgender and intersex persons have suffered historical disadvantage and may not enjoy their human rights equally with others. The gender pay gap, the under-employment of women, barriers to leadership roles, reduced retirement savings and high rates of sexual harassment at work as examples of this continuing inequality. 

The updated guidelines are intended to assist organisations and individuals, seeking to address this inequality by taking proactive measures, to understand and use the special measures provisions in the SDA. 

Chapter 5 of the Guidelines sets out practical examples of special measures. Example 1 is addressing the retirement savings gap between men and women. The example outlines a case study whereby an organisation introduced a policy to implement the following special measures to address the retirement savings gap between men and women: 


1. Paid parental leave for up to 20 weeks 

2. An additional 2 per cent superannuation for women, including periods of maternity leave 

3. Additional support for parental leave, including: 

4. Flexible working conditions, including: 

5. Investigation of other strategies to address the gender pay gap in the organisation, and particularly as a result of an employee’s period of parental leave. 


The Commission has indicated that it does not have the power to certify special measures under the SDA and there are no certifying procedures available elsewhere. Using the considerations outlined in the Guidelines, each individual and/or organisation must satisfy themselves that the special measures are being taken for the purpose of achieving substantive equality, that the special measures proposed will reasonably further this purpose, and that they are appropriately targeted. 

If measures taken by an individual or organisation constitute ‘special measures’ under the SDA they are lawful and there is no need to apply to the Commission for an exemption – exemptions are concerned only with potentially unlawful conduct. 




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

and other regulatory announcements relevant to superannuation.

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