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Issue 693, 11 December 2018 
In this issue: 

 

Insurance in super code transition plans: reminder 

Funds that have signed up to the Insurance in Superannuation Voluntary Code of Practice (the Code) are reminded that they are required to publish their transition plans on their website by 31 December. 

As noted in ASFA Action issue 678, the Code Transition Committee has developed guidance material for funds to adopt and implement the Code. 

This guidance material and information about the preparation of transition plans and the discussion register are available at the insurance section of the ASFA website. 

If you have any questions about the preparation or publishing of transition plans please contact Byron Addison, Senior Policy Adviser by email or on 02 8079 0834. 

 

 

Retirement income framework: disclosure metrics 

Treasury has released a consultation package on proposed disclosure metrics for retirement income products. This represents the next step toward development of a retirement income framework, which will include the offering of comprehensive income products for retirement (CIPRs). 

The package includes a consultation paper proposing a range of metrics to help consumers assess how a product aligns with their own preferences in relation to potential income, flexibility and risk management. These will be presented as factsheets to enable people to compare products. The paper sets out how the options for these metrics and features could be presented, to help consumers make decisions and improve transparency in the industry. 

In addition to the consultation paper, the Australian Government Actuary has produced a technical paper outlining the retirement income risk measure and the method of calculation. 

The Government announced its intention to require providers of superannuation income streams to adopt standardised disclosure metrics in its May 2018 Budget (see ASFA Action issue 669). 

The consultation package builds on a consultation on the retirement income covenant in May-June (see ASFA Action issue 671) and forms part of the Government’s broader work on the retirement income framework. 

If you have any feedback that you would like ASFA to consider including in a response to Treasury, please forward it to Ross Clare by close of business, Thursday 7 March. 

 

 

Social services legislation: Budget measures bill 

The Government has introduced into Parliament a bill to amend the social services legislation to implement changes announced in its May 2018 Budget. 

The Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018 proposes to introduce amendments to the social services legislation to: 

For more information refer ASFA Action issues 692 and 669. 

The Bill remains before the House of Representatives. It has been referred to the Senate Economics Legislation Committee for inquiry and report by 11 February, with a closing date for submissions of 18 January. 

If you have any feedback you would like ASFA to consider in relation to the Bill, please forward it to Ross Clare by close of business Tuesday, 8 January. 

 

 

Fee and cost disclosure: further deferral 

ASIC has made ASIC Corporations (Amendment) Instrument 2018/1088, to further defer aspects of the fees and costs disclosure regime. 

On 1 November 2017 ASIC announced an external expert review of the fees and costs disclosure regime (see ASFA Action issue 652). The review was completed in July 2018 and released as ASIC Report 581 Review of ASIC Regulatory Guide RG 97: Disclosing fees and costs in PDSs and periodic statements (see ASFA Action issue 681). 

ASIC is considering the recommendations made in the Review and expects to release a Consultation Paper in January, advising ASIC’s response to the Review Recommendations. The consultation will also seek input in relation to proposed changes to Schedule 10 to the Regulations and a new draft version of RG 97. 

Schedule 10 to the Corporations Regulations 2001, as modified by ASIC Class Order [CO 14/1252], was already subject to interim arrangements (see ASFA Action issue 656). These currently provide for: 

Instrument 2018/1088 amends [CO 14/1252] to further extend these interim arrangements for an additional 12 months. 

 

 

Contribution work test exemption for recent retirees 

The Government has finalised regulations to provide a one-year exemption from the contributions work test for eligible recent retirees, as announced in the May 2018 Budget. Significantly, the Government has also announced that it will not proceed with a proposed restriction on access to the ‘bring forward’ arrangements for individuals who utilise the exemption. 

The Treasury Laws Amendment (Work Test Exemption) Regulations 2018 introduce a new exemption into the contributions acceptance rules in the Superannuation Industry (Supervision) Regulations 1994. Under the exemption, retirees aged 65-74 with a total superannuation balance under $300,000 will be exempt from the contributions work test for 12 months from the end of the financial year in which they last met the work test. The exemption will apply to voluntary contributions made in the 2019-20 and later financial years. 

The work test exemption was announced in the May 2018 Budget, and draft regulations were released for consultation in October (see ASFA Action issues 669 and 688). That consultation package also included proposed amendments to the tax legislation to restrict access to the bring forward arrangements for non-concessional contributions where an individual had made contributions in reliance on the work test exemption. 

Following feedback from stakeholders on the draft legislation (including from ASFA), the Government has decided to allow those who use the work test exemption in the year they turn 65 to access the ‘bring forward’ arrangements for non-concessional contributions. 

 

 

Meaning of ‘superannuation income stream benefit’ 

The Government has amended the tax regulations to confirm the meaning of ‘superannuation income stream benefit’. 

The determination of whether a superannuation benefit is a superannuation lump sum or superannuation income stream benefit is a key factor in determining the tax treatment of the superannuation benefit. The amendment to the regulations allows superannuation funds to continue to claim the earnings-tax exemption on certain assets. 

The Treasury Laws Amendment (Miscellaneous Amendments) Regulations 2018 amend the Income Tax Assessment Regulations 1997 to ensure the provisions concerning superannuation income stream benefits have always operated, and will continue to operate, as intended. 

The amendments generally commenced on 8 December, however some aspects effectively apply retrospectively from 2007, when significant reforms to simplify the superannuation system commenced. According to the explanatory material, the intention of the existing provisions is clear and taxpayers have been applying the provisions as intended. 

 

 

Transitional superannuation regulations: repeal 

The Government has made regulations in preparation for the repeal of arrangements that related to the transition of superannuation funds into the Superannuation Industry (Supervision) (SIS) regime from 1993. 

The Treasury Laws Amendment (Miscellaneous Amendments) Regulations 2018 provide for the repeal of the Superannuation Industry (Supervision) (Transitional Provisions) Regulations 1993 (Transitional Regulations). 

The Government has indicated that it intends to introduce amendments to the Superannuation Industry (Supervision) Act 1993 (SIS Act) to ensure that those aspects of the transitional arrangements that remain relevant will continue to apply. That amending Bill has not yet been introduced into Parliament, however once enacted, those amendments will mean the SIS Transitional Regulations are no longer required. 

The repeal of the Transitional Regulations will commence from the day on which the relevant amendment to the SIS Act commences, however if that amendment never commences, the repeal will not take effect. The Government had previously deferred the sunsetting (expiry) date of the Transitional Regulations to allow time for the introduction and passage of the amendments to the SIS Act (see ASFA Action issue 684). 

 

 

APRA regulations remade 

The Government has remade regulations that support the legislation establishing APRA. 

The Australian Prudential Regulation Authority Regulations 2018(2018 Regulations) remake the Australian Prudential Regulation Authority Regulations 1998 (1998 Regulations), which were due to sunset (expire) on 1 April. 

According to the explanatory material, the 2018 Regulations remake the 1998 Regulations by restructuring provisions to align with current drafting practices, without changing the substantive meaning or operation of the provisions. The 2018 Regulations also update the list of agencies prescribed for the purposes of disclosing protected information or producing protected documents. 

The 2018 Regulations commenced on 8 December. 

 

 

Status of superannuation bills 

Parliament has now risen for its summer break and will not sit again until 12 February. 

As noted above, the Government recently introduced into Parliament the Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018, to amend the social services legislation to implement changes announced in its May 2018 Budget. 

A number of older superannuation-related Bills also remain before Parliament, including Bills intended to implement some of the Government’s major superannuation reforms: 

 

 

Appointment of ASIC deputy chair 

The Government has appointed Ms Karen Chester as the new Deputy Chair of ASIC. 

Ms Chester has been the Deputy Chair of the Productivity Commission since May 2016, having been appointed a Commissioner in December 2013. During this time, Ms Chester presided over a number of inquiries and projects including the Commission’s three stage review of the superannuation system. 

Ms Chester will commence with ASIC for a five year period from 28 January 2019, replacing Peter Kell. 

 

 

Audit quality survey: reminder 

As reported in ASFA Action issue 690, the Financial Reporting Council (FRC) is conducting a survey on audit quality in Australia and is keen to obtain the views of ASFA members. 

The survey is being undertaken in conjunction with the Australian Auditing and Assurance Standards Board. It seeks to gather the views of stakeholders—including users of financial reports—on their perceptions of audit quality, the value of audit, and what influences this. 

The FRC would appreciate the assistance of ASFA members in completing the survey, as soon as possible. The target audience for the survey is those people who use audited financial reports as part of decision making in their role – for example, folio/investment managers and research analysts. The survey can be completed by multiple people within an organisation. 

The survey can be accessed here. See ASFA Action issue 690 for background on the survey. 

 

 

ASFA REGULATORY WATCHLIST

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

and other regulatory announcements relevant to superannuation.

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