Issue 555, 23 December 2014
In this issue:
- ASIC consultation on section 29QC: disclosure and reporting requirements for superannuation trustees
- APRA releases SRS 711.0: SuperStream benchmarking measures
- Pre-Budget submission
- Review of default superannuation fund terms in awards: update
- ASFA Thomson Geer Regulatory Update (December quarter)
ASIC consultation on section 29QC: disclosure and reporting requirements for superannuation trustees
ASIC has released Consultation Paper 227 Disclosure and reporting requirements for superannuation trustees (CP 227) which aims to improve the comparability of information about superannuation products for consumers.
ASIC is seeking feedback on options proposed for dealing with the uncertainty about how to achieve consistency between the disclosure requirements administered by ASIC and the data that registrable superannuation entity (RSE) licensees are required to report under APRA’s reporting standards. These consistency requirements are contained in section 29QC of the Superannuation Industry (Supervision) Act 1993 and were introduced under reforms aimed at improving the comparability of superannuation products by requiring consistency in how information is calculated.
While section 29QC commenced on 1 July 2013, in March 2014 ASIC deferred its operation until 1 July 2015 to provide time for further consultation with RSE licensees, and then for licensees to make the necessary arrangements to comply with the consistency requirements.
In CP 227, ASIC has outlined three proposals for dealing with the uncertainty about the consistency requirements in section 29QC:
- Issuing a class order (and potentially guidance) to modify the scope and application of section 29QC, so that the requirements only apply to designated topics (such as past performance information) and/or types of disclosure (such as promotional material). Under this option, ASIC would also clarify, by Class Order:
- that the ‘return target’ in the MySuper product dashboard and the ‘investment return objective’ in shorter product disclosure statement (PDS) disclosure should not be considered the same or equivalent information for the purposes of section 29QC
- which elements of the MySuper product dashboard are the same as, or equivalent to, other information in documents such as shorter PDSs
- that if APRA requires an RSE licensee to report data about asset allocation (including defining ‘cash’ or any other asset class), the licensee will not need to amend its shorter PDS disclosure to align with these definitions.
- Issuing guidance (but no class order) to bring together existing guidance on section 29QC and provide clarity around its interaction with the disclosure requirements.
- Allowing section 29QC to restart on 1 July 2015 without any further changes to its operation (no class order or additional guidance).
Submissions on CP 227 close on 13 March 2015, and ASIC intends to issue a regulatory guide on section 29QC in the second quarter of 2015. ASIC is particularly seeking information about the likely impact that the above proposals would have on compliance costs and competition.
If you have any feedback that you would like ASFA to consider including in its submission, please email it to David Graus by close of business (COB) Friday 13 February 2015.
APRA releases SRS 711.0: SuperStream Benchmarking Measures
The Australian Prudential Regulation Authority (APRA) has released the final version of Reporting Standard SRS 711.0 SuperStream Benchmarking Measures (SRS 711.0) and an accompanying letter.
Following extensive consultation with ASFA and other industry associations, the data requirements for SRS 711.0 have been simplified. The focus of the report is now on the volume of contribution transactions from active employers, the channel through which they are received (Channel A, Channel B or a non-conforming channel) and the total processing cost.
Importantly, trustees are no longer required to report information relating to rollovers under SRF 711.0.
The report will provide information to regulators on both the take-up of electronic commerce by employers and the movement of employers from existing electronic contribution arrangements to fully SuperStream-compliant contribution arrangements.
As SRF 711.0 applies for reporting periods commencing on or after 1 July 2015 and ending on or before 30 June 2019, the first submission of data will be due by 28 October 2015, in respect of the quarter ending 30 September 2015.
The revised reporting standard and the letter to trustees can be found on the APRA website.
Pre-Budget submission
The government has called for submissions in regard to the 2015/16 Budget.
ASFA will be preparing a submission and any suggestions from ASFA members for recommendations to be included in the submission are welcomed. The focus of the submission will be on measures that would impact on government expenditure or revenue in the 2015/16 financial year or later years.
Suggestions should be provided to Ross Clare by COB 23 January 2015.
Review of default superannuation fund terms in awards: update
Under previous announcements by the Fair Work Commission (FWC), there was an expectation that its review of default fund terms in awards would lead to new default fund provisions in awards in early 2015.
However, the review process came to a halt in June 2014 as a result of a Federal Court decision which indicated that the expert panel dealing with the applications to be listed as a default fund was not properly constituted.
Information from the government, dated 3 December 2014, indicates that the appointment of a new Expert Panel member is under active consideration by the government. The information also states that, although any outcome from the review of default funds in awards cannot come into effect before 1 January 2015, there is no requirement that such determinations must be made by 1 January 2015.
The wording of the legislation indicates that the timing for the reviews of default fund terms is as soon as practical after 1 January 2015, rather than at any time after that date. This view is reflected by information on the FWC website. While it is unclear what that means when there is no expert panel in place and it is not practical to proceed, in paragraph 38 of the judgement on the constitution of the expert panel, the Federal Court indicates that a failure to appoint an Expert Panel member could lead to certain consequences:
“In particular, whilst there is presently a vacancy on the Commission to which the Governor-General may appoint a new Expert Panel Member, the Court cannot exclude the future possibility that the Governor-General may not perform that function or, perhaps more plausibly, that the new member so appointed turns out to be unable to take part, for whatever reason, in the Expert Panel’s deliberations. In that circumstance, there may be – the Court does not say there is – an issue as to whether the Expert Panel may be able nevertheless to proceed even if not properly constituted under the doctrine of necessity: cf. Metropolitan Fire and Emergency Services Board v Churchill (1998) 14 VAR 9. In this Court there was no occasion for any close analysis of this doctrine and no party substantively attempted it. It would be inappropriate to foreclose by injunction any future reliance by the President upon that doctrine both because this Court has heard no substantive argument about the matter (simply because the facts which might generate such an argument have not yet occurred) and because it is quite possible that they might never arise.”
While there is no indication at this time that the Fair Work Commission is going down the path of the doctrine of necessity, appointment of an Expert Panel member by the government would clearly be a surer solution to the current impasse faced by the FWC.
In the meantime, current default arrangements will remain in place, including the grandfathering of past default fund arrangements which were in place prior to 12 September 2008. However, it should be noted that it is a legislated requirement that an employer use a MySuper product as a default fund if they are to comply with the Superannuation Guarantee requirements.
ASFA Thomson Geer Regulatory Update (December quarter)
Delivered in partnership with Thomson Geer (and previously with HWL Ebsworth), the latest edition of the ASFA Thomson Geer Regulatory Update has been released and is now available for members to download from the Regulatory Update section of the ASFA Toolbox.
This free ASFA member service seeks to keep you up to date with the changing superannuation environment, new legislation, developing policy and pertinent case law developments. The Update is issued quarterly, and provides essential information for those wanting to stay abreast of the challenges and issues facing superannuation funds.
The information will be of particular use to:
- trustees
- compliance managers
- risk managers
- operations managers
- administrators and self-managed superannuation fund (SMSF) service providers
- members of investment committees
- government and regulatory liaison managers.
For trustees, the Update will provide an overview of key information, with more detailed information directed at senior managers and administrators.
Members wishing to discuss the Update can contact ASFA general manager, policy operations, Tony Keir.
