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Issue 819, 17 August 2021 
In this issue: 


Financial and auditing requirements for super funds: consultation 

Treasury is consulting on an exposure draft Bill setting out financial reporting and auditing obligations in relation to registrable superannuation entities (RSEs). 

In broad terms, the draft Treasury Laws Amendment (Financial Reporting and Auditing Requirements for Registrable Superannuation Entities) Bill 2021 amends the Corporations Act 2001, Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Australian Securities and Investment Commission Act 2001 so the financial reporting obligations imposed on RSEs are consistent with those that apply to public companies and registered schemes under the Corporations Act. Currently, the requirements in relation to financial reporting and auditing for RSEs are primarily set out in the SIS Act, with some requirements in the prudential standards. 

The reforms, which are generally intended to apply from 1 July 2022, include the following: 

The Government has noted that the reforms are intended to improve the accountability and transparency of superannuation funds, and complement the Your Future, Your Super package, which “makes superannuation work harder for Australians, and leverage the expansion of ASIC’s role in superannuation as recommended by the Financial Services Royal Commission”. 

If you have any feedback you would like ASFA to consider in relation to the exposure draft, please forward it to Fiona Galbraith by close of business Friday 27 August. 


Review of the economic benefits of insurance in super: EOI for ASFA trustee advisory group 

ASFA is seeking expressions of interest for participation in a trustee advisory group to support and provide a trustee perspective for an ASFA review of the economic benefits of insurance in super. Ideally candidates will be employed by a superannuation fund, and either direct reports to the CEO or Heads/General Managers of the trustee’s insurance division. 

The ASFA review will look at the role of insurance in super, its economic benefits, and the potential for reform to enhance those benefits further. 

The trustee advisory group for the review will help to inform the work of the review and provide a trustee perspective on issues raised in the course of the review. 

If you are interested in joining ASFA’s trustee advisory group please contact Byron Addison by close of business Monday, 23 August. 


YFYS performance test: APRA paper on combining MySuper product histories 

APRA has released an information paper on its approach to administering the annual performance test for superannuation products, with a focus on its methodology for combining investment performance in the performance test. 

The Your Future, Your Super (YFYS) reforms introduced an annual performance test, which applies to MySuper products from 1 July 2021 and will apply to trustee-directed products from 1 July 2022. 

APRA has noted that there are two situations where performance may need to be combined to facilitate the administration of the performance test:  

To achieve the policy intent of the performance test in practice, APRA has developed a number of principles it will follow when determining whether to combine the performance of multiple MySuper products. These relate to avoiding product ‘phoenixing’, identifying the predecessor product to create the combined product, continuation n of the return history achieved by the MySuper product, and maintaining the performance of continuing MySuper products. 

The information paper provides examples of scenarios where APRA will consider issuing a determination to combine the performance of multiple MySuper products. The paper also outlines the methodology for combining investment performance in the performance test and includes information about how investment performance will be reflected in the Your Super comparison tool. 

APRA has indicated that it wrote to the individual trustees of impacted products ahead of releasing the information paper. 


Improving the visibility of super assets in family law proceedings 

The Government has introduced into Parliament a Bill containing reforms to facilitate the identification of superannuation assets by parties to family law proceedings. The reforms are intended to implement a commitment made by the Government in late 2018 as part of the Women’s Economic Security Statement. 

The Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 contains amendments to the Family Law Act 1975 and the Taxation Administration Act 1953 to: 

The intention of the new information-sharing process is to make it harder for parties to hide or under-disclose their superannuation assets in family law proceedings, and reduce the time, cost and complexity for parties seeking accurate superannuation information. See ASFA Action issue 691 for background in relation to this measure. An exposure draft of the legislative amendments was released for consultation in late May (see ASFA Action issue 807). 

The reforms will generally commence to proceedings before the relevant courts from 1 April 2022 (even if the proceedings commenced before that date). 

However, as they relate to applications by individuals in Western Australia, the reforms will not commence unless the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020 (‘WA Splitting Act’) comes into effect. The WA Splitting Act set up a framework to extend the family law superannuation splitting regime to separated de facto couples in Western Australia (WA) to split their superannuation interests as part of their property settlements. The commencement date for the WA Splitting Act is yet to be proclaimed and is itself tied to the commencement of WA legislation that referred to the Commonwealth the constitutional powers of the WA Parliament to legislate in relation to the property of de facto couples. See ASFA Action issues 786, 783 and 729 for background). 


Recontribution of COVID-19 early release amounts: ATO approved form 

The ATO has issued some guidance for superannuation funds following recent legislative amendments that allow individuals who withdrew amounts under the COVID-19 early release initiative to recontribute them into superannuation. 

The Treasury Laws Amendment (More Flexible Superannuation) Act 2021, which received Royal Assent on 22 June 2021 allows individuals who received a COVID-19 early release of superannuation amount to re-contribute up to that amount back into super without it counting towards their non-concessional contributions cap. Recontributions under this measure can be made between 1 July 2021 and 30 June 2030. (See ASFA Action issues 811, 810 and 809 for background.) 

In order to qualify for the exemption from the non-concessional contributions cap, a member utilising this measure must complete an approved form and provide it to their fund before or at the time of making the re-contribution. 

The ATO has released CRT Alert 008/2021 advising that it is currently finalising the re-contribution of COVID-19 early release amounts approved form and aims to have it available by the end of August 2021. 

A fund may choose to design its own re-contribution of COVID-19 early release amounts approved form for its members. In doing so, however, the ATO notes that the fund must ensure the form includes specific elements. CRT 008/2021 includes detail of the elements that must be included, and whether they are mandatory or optional. The ATO has also outlined a number of key messages that funds should consider including for members. 

The ATO will shortly issue further information on what funds need to do to administer recontributed amounts under this measure. 


Impact on compensation receipt on contribution caps: ATO factsheet 

The ATO has released a factsheet for individuals about the potential impact on their superannuation contribution caps where an amount of compensation is received by their superannuation fund and allocated to their account. 

The factsheet focuses on situations where a fund receives compensation from a financial services provider due to the provision of inappropriate financial advice or where fees were paid but no advice provided. It notes that whether the compensation is a contribution and therefore counted towards an individual’s contribution caps will depend on the circumstances in which the compensation is received, including: 


Virtual meetings, electronic document execution: temporary relief extended 

A Bill extending temporary relief measures that ensure companies can validly execute documents electronically and conduct virtual meetings has been passed by Parliament and has received Royal Assent. 

As originally introduced into Parliament in February, the  Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 extended from 21 March until 15 September 2021 the expiry date of temporary relief around virtual meetings and electronic document execution that was granted in the early stages of the COVID-19 pandemic. Given the delay in passage of the Bill, the temporary relief in relation to electronic document execution lapsed on 21 March however ASIC effectively extended the relief in relation to virtual meetings by adopting a temporary ‘no action’ position. (See ASFA Action issues 797 and 794 for background.) 

In passing the Bill, the Senate made amendments — later accepted by the House of Representatives — that extend the relief in relation to both virtual meetings and electronic document execution until 31 March 2022. The Bill now also gives ASIC permanent powers to provide individual or class order relief in relation to meetings and sending documents. ASIC will be able to provide this relief in circumstances beyond companies’ control, such as those caused by the COVID-19 pandemic. 

The Government has indicated that it will now 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. 

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. 


ASIC’s approach to new laws reforming financial sector 

ASIC has outlined its approach to compliance with a range of financial sector reforms that will commence in October, including the design and distribution obligations, restrictions on the unsolicited selling of financial products (hawking), new internal dispute resolution standards and breach reporting requirements, as well as reference checking and information sharing requirements for financial advisers. 

ASIC Chair Joe Longo acknowledged that while the reforms “have been in the pipeline for some time, ASIC recognises they require significant changes to businesses’ systems and processes and take effect at the same time industry is facing other challenges, including from COVID-19 and renewed lockdowns”. 

As a result, ASIC recognises there will be a period of transition as industry finalises implementation of additional compliance measures. ASIC will “take a reasonable approach in the early stages of these reforms provided industry participants are using their best efforts to comply”, taking into account “the context that firms are operating in”, including the scale of the changes, the challenges arising from the current operating environment and the fact that final guidance on some measures will not be released until relatively close to the start date. 

“ASIC’s initial approach extends to technical or inadvertent breaches, where firms have systems changes underway and act quickly to address problems as they arise. However, where firms are not acting in good faith or where we detect conduct causing actual harm, we will not hesitate to enforce the law.” 

Mr Longo noted that ASIC wants to ensure the reforms are successfully implemented “and that means we will continue to work with industry, and build on the efforts by industry associations and individual licensees in preparing for these reforms”. 

Of particular relevance to superannuation, Mr Longo’s comments relate to the following measures: 


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 two sets of additional FAQs on the phase 1 standards, on 10 and 16 August. 

The releases from APRA also provide an update on the staged implementation approach: 

APRA intends to update SRS 251.0 Insurance Arrangements to extend, from 30 September 2021 to 28 February 2022, the deadline for RSE licensees to submit the five years of historical data required for SRF 251.2 Insurance Payments. APRA also intends to update: 

APRA has noted that it expects RSE licensees to have plans and processes in place to improve their reporting prior to the submission of the 30 June 2022 reporting. 

APRA has also noted that RSE licensees are required to report data on MySuper and trustee-directed products for the first year of reporting for the following reporting forms: 

The Regulation which defines a trustee-directed products was made on 5 August(as part of the Your Future, Your Super regulation package). APRA will extend the due date for submission of 30 June 2021 data for trustee-directed products from 30 September to 28 October 2021 to allow sufficient time to implement reporting. RSE licensees that are in a position to provide the full coverage of reporting earlier are encouraged to do so. RSE licensees must report 30 June 2021 data for MySuper products on these forms by 30 September 2021. The 30 September 2021 due date for other reporting forms remain unchanged. 

APRA intends to update the definition of ‘trustee-directed product’ in the reporting standards to reflect the regulation prior to determining the reporting standards. APRA has also made updates to FAQ 605.0b on ad-hoc reporting requirements for products and options and FAQ 1.05 on the definition of trustee-directed products. 


Streamlining requirements for actuarial certificates: funds fully in retirement phase 

The Government has introduced into Parliament a Bill containing amendments to remove a requirement for some superannuation funds to obtain actuarial certificates when calculating their ‘exempt current pension income’ (ECPI).  

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. 

In its April 2019 Budget, the Government announced it would allow fund trustees with interests in both the accumulation and retirement phases during an income year to choose their preferred method of calculating ECPI and would no longer require funds to obtain an actuarial certificate when calculating ECPI using the proportionate method if all members of the fund are fully in the retirement phase for all of the income year. The measures were originally intended to apply from 1 July 2020 however this was subsequently deferred (see ASFA Action issues 766, 763 and 703 for background). 

The Government has now introduced into the House of Representatives the Treasury Laws Amendment (2021 Measures No. 6) Bill 2021, which contains amendments to partially implement the April 2019 Budget announcement. In particular, the amendments 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. This is achieved by permitting such funds to use the segregated method to calculate exempt current pension income. 

The amendments are intended to commence from the start of the first quarter after the Bill receives Royal Assent. 




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

and other regulatory announcements relevant to superannuation.

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