Issue 755, 18 May 2020
In this issue:
- COVID-19 Coronavirus: early release of super – ATO update, APRA data
- COVID-19 Coronavirus: Parliamentary sitting schedule updated
- Putting Members’ Interests First: APRA FAQs about successor fund transfers
- Advice in super: ASFA working group – reminder
- Tax relief for merging funds: bill passed
- Concessional contribution cap ‘bring forward’ rule: amending bill
- Financial institution supervisory levies: amending bills
- Update to Insurance in Superannuation Voluntary Code of Practice
- Superannuation Consumer Centre
COVID-19 Coronavirus: early release of super – ATO update, APRA data
APRA has today made its third weekly publication of industry-level data from its early release initiative (ERI) data collection, taking into account data submissions for the period ended 10 May.
The data shows that:
- from the inception of the scheme on 20 April to 10 May, payments that have been made to eligible members have taken an average of 3.3 business days to pay after receipt of the application from the ATO and 94.4 per cent have been made within five business days
- over the week to 10 May, funds made payments to 379,000 members, bringing the total number of payments to 1.19 million since inception. The total value of payments during the week was $2.7 billion and $9 billion since inception. The average payment since inception is $7,546.
APRA has also published the second tranche of fund-level statistics from its ERI data collection, revealing the number and value of the payments processed by each fund, as well as the time taken to make payments. This data shows that:
- 146 of the 177 funds that submitted data made early release payments in the period since inception to 10 May
- among all funds that submitted data, 140 (79 per cent) completed more than 90 per cent of payments within the five business days guideline indicated by APRA. Further, with very few exceptions (less than 1 per cent), payments to members have been completed within ten business days from receipt of applications from the ATO
- the ten funds with the highest number of applications received from the ATO have made 795,000 payments worth a total of $5.96 billion. The average payment from these funds was $7,664, with over 93 per cent of payments made within five days.
The ATO has also continued to update its questions and answers in relation to the early release initiative, most recently through the release of CRT Alert 027/2020.
COVID-19 Coronavirus: Parliamentary sitting schedule updated
The sitting schedule for Parliament has been updated to include a number of new sitting days, after the remainder of the Autumn sittings, and all of the Winter sittings, were initially cancelled as a result of the COVID-19 pandemic.
Having sat on 8 April and again last week, both houses of Parliament will now sit on 10-12 and 15-18 June, before resuming for a full schedule from 4 August.
Putting Members’ Interests First: APRA FAQs about successor fund transfers
APRA has updated its frequently asked questions (FAQs) regarding the Treasury Laws Amendment (Putting Members’ Interests First) Act 2019 (PMIF Act) to include some additional information about the status of elections made prior to a successor fund transfer (SFT) and the PMIF transitional provisions.
APRA has previously indicated, via a note on its PMIF FAQ page, that it will pursue amendments to the Superannuation Industry (Supervision) Act 1993 (SIS Act) to ensure the Government’s original policy intent is achieved in a number of areas identified by industry. On 15 May, APRA updated this note to advise that it will seek legislative change to provide that:
- elections regarding the provision of insurance under sections 68AAA, 68AAB and 68AAC of the SIS Act remain valid following a SFT
- the application and transition provisions of the PMIF Act apply such that members who were not required to make an election under the Act (such as members who provided an election before 1 November 2019 or members under 25 prior to 1 April 2020) are not required to elect following an SFT.
APRA has also added a new FAQ (currently unnumbered), indicating that it intends to take a facilitative approach to breaches where a registrable superannuation entity (RSE) licensee has not sought or obtained from a member an insurance opt-in election, on the basis that:
- the member had previously provided an insurance opt-in election to the transferring RSE licensee, or
- the member was captured by the application and transition provisions of the PMIF Act.
The response states as follows:
In line with the Government’s policy intent to amend the relevant provisions of the SIS Act, APRA will take a facilitative approach to breaches in these circumstances.
Where an RSE licensee of a successor fund determines that any breach of the SIS Act relates to not seeking an insurance opt-in election from a member (who had previously provided their insurance opt-in election to the transferring RSE licensee, or who was captured by the application and transition provisions of the PMIF Act) following a SFT (refer Note to industry above), the RSE licensee of the successor fund should inform APRA and provide details of how it intends to apply the law, including whether it is taking into account future law changes that have been signalled by the Government.
Where the RSE licensee determines that a significant breach has occurred, or will occur, the licensee must ensure it follows its standard breach assessment procedures and reports any breaches relevant to APRA within the required timeframe. Where the breach relates to future law changes, the RSE licensee may rely on identifying this matter in its breach report, subject to further advice from APRA regarding whether any additional action is required.
Where the breach relates to any other matter, other than the RSE licensee not seeking an insurance opt-in election from a member (who had previously provided their insurance opt-in election to the transferring RSE licensee) following a SFT, the breach notification must contain a clear outline of the nature of the breach, its impact on members and the trustee’s plan and timeframe for rectification and remediation.
Further details on APRA’s breach reporting requirements are available here.
Advice in super: ASFA working group – reminder
In the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission), recommendations 3.2 and 3.3 considered advice in super (see ASFA Action issues 735 and 697).
As reported in ASFA Action issue 754, ASFA is canvassing member interest in ASFA facilitating a working group to consider advice in super challenges and/or concerns, with a view of considering how advice in super could be improved.
If you would be interested in joining an Advice in Super Working Group, please contact Maggie Kaczmarska by close of business Wednesday 20 May.
Tax relief for merging funds: bill passed
In ASFA Action issue 737 we reported that the Government had introduced into Parliament amendments to make permanent the current tax relief for merging superannuation funds, that was due to expire on 1 July 2020. The amendments, in the Treasury Laws Amendment (2020 Measures No.1) Bill 2020, implement a commitment made in the 2019-20 Budget (see ASFA Action issue 703) and a recommendation by the Productivity Commission.
On 14 May, the Bill was passed by both the House of Representatives and the Senate without amendment. The Bill is now awaiting Royal Assent.
Concessional contribution cap ‘bring forward’ rule: amending bill
The Government has introduced into Parliament an amendment to the tax law to allow Australians aged 65 and 66 to access the ‘bring forward’ rules for non-concessional contributions.
Currently, the Income Tax Assessment Act 1997 (ITAA) allows people under 65 to make up to three years of non-concessional contributions under ‘bring-forward’ arrangements. The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 contains an amendment extending the bring forward arrangements to individuals under age 67, with effect from 1 July 2020.
The amendment is one part of a package of measures announced in the April 2019 Budget to make the superannuation contribution rules more flexible for older Australians. The remainder of that package involves amendments to the rules governing acceptance of contributions by superannuation funds, to increase the:
- age at which the work test starts to apply for voluntary concessional and non-concessionally contributions from age 65 to age 67
- cut-off age for spouse contributions from age 70 to age 75.
These changes to the contributions acceptance rules will be made via amendments to the Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Account Regulations 1997. The Government has previously consulted on a draft of these amendments – see ASFA Action issue 740.
Financial institution supervisory levies: amending bills
The Government has introduced into Parliament a package of bills to amend the framework for the financial institutions supervisory levy – commonly referred to as the APRA levy.
The package includes the:
- Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020. This amends the Australian Prudential Regulation Authority Act 1998 to ensure the Commonwealth can recover the costs of a wider range of activities that are funded by the Commonwealth and recoverable through the financial institution supervisory levy framework
- Superannuation Supervisory Levy Imposition Amendment Bill 2020 and the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020. These amend the existing levy imposition Acts for superannuation funds and retirement savings accounts, to increase the statutory upper limit on the amount of levies APRA can collect from entities and amend how the upper limit is indexed. (Other bills in the package make comparable amendments in relation to authorised deposit-taking entities and insurance companies.)
The amendments will commence on the day after the bills receive Royal Assent.
The introduction of the bills follows consultation last year on the design and operation of the supervisory levy (see ASFA Action issue 718).
Update to Insurance in Superannuation Voluntary Code of Practice
The Insurance in Superannuation Voluntary Code of Practice (the Code) has been updated to align it with the Protecting your Super and Putting Members’ Interests First legislative packages and to ensure it remains clear, relevant and focused on improving standards for insurance in super. A background document identifying the changes to the Code, and the reasons for the changes, has also been published.
The update follows a review and public consultation process which commenced in late 2019. One section of the Code, the Reinstatement section, remains under review. If you have any questions about the updated Code, please contact Byron Addison on 02 8079 0834.
Superannuation Consumer Centre
The Government has introduced into Parliament a miscellaneous amendment bill that includes a provision making Superannuation Consumers’ Centre Ltd a deductible gift recipient (DGR).
Under a provision included in the Treasury Laws Amendment (2020 Measures No.2) Bill 2020, taxpayers will be able to claim an income tax deduction for gifts made to Superannuation Consumers’ Centre Ltd provided the gift complies with the existing requirements of the income tax law. According to the explanatory memorandum:
- Superannuation Consumers’ Centre Ltd is a registered charity that supports Australian consumers to access quality superannuation advice and manage their retirement savings
- its listing as a DGR “ensures that Superannuation Consumers’ Centre Ltd receives appropriate support through the Commonwealth tax system for assisting consumers to manage their retirement savings”.
The listing of Superannuation Consumers’ Centre Ltd as a DGR will apply for gifts made between 1 July 2019 and 30 June 2025 (inclusive).
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
