Issue 554, 17 December 2014
In this issue:
- Pass-through regulations made
- MYEFO: superannuation changes
- APRA consultation on fraud risk management guidance
Pass-through regulations made
The Superannuation Industry (Supervision) Amendment (Pass Through of Employee Details) Regulation 2014 has been executed by the Governor-General and published on the Federal Register of Legal Instruments on 16 December 2014.
The amendment applies from 1 July 2015 onwards.
SIS Regulation 7.07E provides that where an employer pays a superannuation contribution for an employee to a superannuation fund the employer must, on the same day, give the superannuation fund certain prescribed information about the contributions.
The pass-through regulation modifes that requirement by providing in new regulation 7.07EA that the information about the contribution may instead be given to the employer’s default fund. A default fund is defined as:
“In relation to an employer, means an RSE licensee:
- authorised to offer a MySuper product under section 29T of the Act; and
- to which the employer mentioned in subregulation (1) makes contributions for the benefit of any of its employees in compliance with subsection 32C(2) of the Superannuation Guarantee (Administration) Act 1992.”
The aim of the regulation is to allow employers to deliver all of their contributions data to a single point and be certain that it will reach the correct destination.
The regulation does not apply to a self-managed super fund (SMSF) or to data that is not sent in accordance with the Superannuation Data and Payment Standards.
Implication of the regulation
For employers, where they have an employer choice fund arrangment in place, they are able to send all of their contributions data to that fund. If the employer has multiple default fund arrangments in place, the contributions data may be sent to any one of those funds.
For a fund, where there is a default fund relationship with an employer, then that fund must accept and pass through contributions data from that employer that is destined for another fund (should the employer require that to happen).
In practical terms, the regulation will not impact a fund that is currently offering a clearing house service, unless the employer wants the fund to only handle the data, not the money.
Funds most impacted will be those that offer an employer portal that only accepts contributions destined for the fund. To comply with the pass-through regulation, such a fund will have to either develop the ability of the portal to accept contributions data for other funds, or provide a capability for an empoyer to deliver the other contributions data for other funds direct to the fund’s gateway.
ASFA members are encouraged to read the explanatory statement, which is consistent with both the overall requirements of the SIS Regulations and the Data and Payment Standards Legislative Instrument, and sets out clearly how this new trustee obligation can be met.
ASFA has identified a number of practical issues associated with the implementation of the regulation and has joined a small working group convened by the ATO that is looking at the implementation of this regulation. The working group will report back to stakeholders at the Contributions Implementation Working Group on 20 February 2015.H
If you have issue you would like raised at the working group, please contact Robert Hodge.
MYEFO: superannuation changes
In the Mid-Year Economic and Fiscal Outlook (MYEFO), released by Treasurer Joe Hockey on Monday 15 December, three changes to the operation of the Superannaution Guarantee (SG) were announced:
- The commencement date for calculation of the nominal interest charge will be the due date of payment, rather than the first day of the period. This will result in a reduction of four months of nominal interest charge. While this will benefit employers by lowereing the amount of nominal interest payable and disadvantage employees (as the nominal interest, when paid, is passed on to the employee), it is a more equitable arrangement
- The SG charge will be calculated on the same basis as the SG entitlement is calculated, ordinary time earnings, rather than the current method of an earnings base of total salary and wages
- The SG penalty regime with respect to late or unpaid SG charge assessment debts will be aligned with the general tax penalty provisions, resulting in a reduction in the penalty amount.
The changes can be described as red-tape reduction and tie in with the other small employer measures recently announced by the Minister for Small Business, which were related more to the area of de-regulation.
APRA consultation on fraud risk management guidance
As advised in ASFA Action Issue 550 (30 October 2014), APRA has released for consultation a draft prudential practice guide that provides guidance on good practices for registrable superannuation entity (RSE) licensees in relation to fraud risk management.
Draft Prudential Practice Guide SPG 223 Fraud Risk Management (SPG 223) focuses on current and emerging fraud risk factors impacting the superannuation industry from both an internal and external perspective. Draft SPG 223 substantially updates and expands upon APRA’s existing fraud risk guidance, to continue to drive improved practices in this important area.
The deadline for submissions on draft SPG 223 is Monday 19 January 2015.
If you have any comments that you would like ASFA to consider including in our submission, please forward them in writing to Jon Echevarria by Friday 9 January 2015.
