Issue 764, 14 July 2020
In this issue:
- COVID-19 Coronavirus: early release of super – APRA data
- COVID-19 Coronavirus: updated ASIC FAQ re insurance impacts
COVID-19 Coronavirus: early release of super – APRA data
APRA has made its eleventh weekly publication of industry-level data from its early release initiative data collection.
The data covers applications made from inception of the early release initiative on 20 April through to 5 July. This week’s report therefore crosses over the end of ‘phase 1’ of applications, for the 2019-20 financial year, and the beginning of phase 2, which runs from 1 July to 24 September 2020.
APRA has noted that:
- the statistics capture ‘initial’ applications, where a member has made their first application for early release of superannuation benefits (irrespective of which time period the application applies to) and ‘repeat’ applications, where a member has made an application in both time periods
- this week’s statistics—for the week 29 June to 5 July—include applications received in respect of both the 2019-20 and 2020-21 financial years
- the number of applications reflected in the statistics exceeds the number of individuals that have applied as some applications relate to more than one superannuation fund. APRA is therefore unable to identify precisely how many members have withdrawn benefits during both eligible time periods
- the data collection is also unable to precisely determine how many applications apply to the 2019-20 financial year as opposed to the 2020-21 financial year, given the reporting windows and lags that exist in the application and reporting process.
The data shows that, from 20 April to 5 July:
- payments totalling $19.1 billion had been made, with an average payment of $7,511
- 2.7 million ‘initial’ applications had been received, with an average application amount of $7,476
- 300,000 ‘repeat’ applications had been received, with an average application amount of $8,904
- funds were taking an average of 3.3 business days to pay an application, with 95 per cent of applications paid within five business days.
Out of the 511,000 applications received during the reporting week 29 June – 5 July, 165,000 were for members making initial applications and 346,000 were for members making repeat applications.
APRA has also published the tenth tranche of fund-level statistics from its early release data collection, revealing the number and value of the payments processed by each fund, as well as the time taken to make payments.
COVID-19 Coronavirus: updated ASIC FAQ re insurance impacts
ASIC has updated its frequently asked questions (FAQs) about current superannuation regulatory issues that have arisen from the COVID-19 pandemic.
FAQ 1C, which addresses ASIC’s expectations of trustees in communicating to their members about the impact of COVID-19 on their insurance inside superannuation, was updated on 10 July.
The updated response is as follows:
As outlined in ASIC and APRA’s joint letter, trustees should understand how members’ insurance may be affected by COVID-19 and ASIC expects trustees to communicate these impacts to their members.
In addition to direct communication with members who have a zero or low account balance (see FAQ 1B above), trustees should include content within existing COVID-19 information on the fund’s website, as well as by providing direct links to resources where members can access more detailed and specifically relevant information.
For example, trustees should communicate:
- whether loss of employment or reduced work hours results in loss of cover, or a different level of cover, or changes to how insurance claims will be assessed;
- relevant rules around cessation of insurance (for example, in relation to minimum account balance or ongoing contributions requirements), including what options members have regarding reinstatement of cover if members lose their insurance;
- whether any pandemic clauses might apply and if so, what the effect of that is; and
- how members can access additional support or information when they’re making a claim.
In relation to cessation of insurance, ASIC notes that it is incorrect to simply state that an account with a balance that falls below $6,000, including due to early release, may or will lose insurance because of the Putting Members’ Interests First (PMIF) and Protecting Your Super Package (PYSP) measures.
If a member’s account balance falls below $6,000, the PMIF and PYSP measures do not:
- from 1 April 2020, cause insurance to automatically cease; or
- require an account to automatically be transferred to the ATO (because while a balance below $6,000 is one part of the criteria for the account transfer, there are several other criteria that must also be satisfied).
For more guidance on the operation of the measures see: APRA’s FAQs on Putting Members’ Interests First (PMIF) and Protecting Your Super Package (PYSP).
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
