Issue 571, 25 June 2015
In this issue:
- Important discussions between the Australian Treasury and the UK’s Her Majesty’s Revenue and Customs on QROPS
- ASFA-Veda Data Benchmark: March 2015
Discussions between the Australian Treasury and the UK’s Her Majesty’s Revenue and Customs on QROPS
ASFA has been making ongoing representations to the Australian Treasury on recent rule changes regarding Qualifying Regulated Overseas Pension Schemes (QROPS), which significantly impact on transfers of account balances from the United Kingdom (UK) into some Australian superannuation funds.
Below, is what we understand was covered in a high-level discussion between the Australian Treasury and the UK’s Her Majesty’s Revenue and Customs (HMRC) on QROPS on 24 June 2015. This information is not intended to be, nor should it be read as, advice.
ASFA will urgently be arranging a meeting with the Treasury to discuss the best approach for the future, and will continue to keep you informed of any further developments.
The Treasury was advised that:
Non-compliance of Australian funds
HMRC has advised Treasury that the QROPS changes affect all transfers completed after 6 April 2015. Their view is that Australian funds (through no fault of their own) became non-compliant on 6 April, as they are unable to comply with the new UK Pension Age (due to our overarching legal framework as well as trust deeds).
Relief for certain transfers
HMRC has advised the Treasury, that they may consider relief for transfers completed after 6 April (although at present only to 17 April, which was the date that the letter was sent to QROPS funds advising of the changes).
HMRC have outlined to the Treasury that, in order to obtain relief, funds should advise HMRC of the number of transfers completed after 6 April. Treasury has advised ASFA that they will work with HMRC to determine what this process might look like.
Complying with the new conditions
As part of the advocacy strategy on this issue, the Treasury wrote to HMRC explaining why compliance for funds in Australia is not possible due to legal constraints. In addition, we understand that New Zealand KiwiSaver funds have shut down their QROPS business, and that they are providing some information to HMRC on transfers that occurred after the 6 April date.
Rationale for the change
HMRC advised the Treasury that it does not have any compliance or integrity concerns in regards to Australian funds. It claimed that the purpose of the new rules was to set a simple test of equivalence with the UK rules. However, it did indicate some openness to modifying the rules, but only in regard to certain exceptional circumstances (such as withdrawals that are ordered by courts or go to the Commissioner of Taxation, rather than to members).
Further engagement with the UK Government
We understand that the Australian Treasury will be looking to engage the relevant UK minister on this topic.
HMRC website
In addition, the current HMRC website indicates they have taken the decision to temporarily suspend the published list of Recognised Overseas Pension Schemes (ROPS). The list will return in an updated form by 1 July 2015.
ASFA contact
Fiona Galbraith, director of policy, is the main contact in ASFA on QROPS and she can be contacted on 03 9225 4021 or by email if you have any questions.
ASFA-Veda Data Benchmark: March 2015
ASFA recently assisted Veda with the production of the tenth edition (March, 2015) of the ASFA-Veda Data Benchmark. The Benchmark was established in 2010 to track industry improvements and highlight the issue of data integrity across a number of areas.
Key points from the tenth edition include:
- the tenth edition of the ASFA-Veda Data Benchmark analyses 3 million active members across 26 funds, 7 funds with less than 10,000 members, 11 funds with between 10,000 and 90,000 members, and 8 funds with more than 90,000 members
- at 88.1 per cent, the ASFA-Veda Data Benchmark indicates that almost 12 per cent of member records have important core data that is missing or incorrect
- when excluding errors in member beneficiaries, the Benchmark increases to 91.1 per cent. This measure allows the comparison of Australian funds to United Kingdom (UK) funds. Australian funds are not achieving the data-quality standards set by the UK Pensions Regulator (TPR)
- self-administered funds tend to have better data quality than third-party administered (TPA) funds
- the data integrity of large funds (over 90,000 members) at 87.8 per cent is under that of small-medium funds at 89.7 per cent
- measurement leads to improvement. Eight out of nine funds in the current ASFA-Veda Data Benchmark, which have undertaken repeat audits, have improved their data quality
- trustees now have CPG 235 as a guide to help improve data quality for fund members. This should encourage greater participation in the ASFA-Veda Data Benchmark
- the ASFA-Veda Data Benchmark results continue to indicate that funds need to do significantly more to improve the quality and integrity of their member data. However, more funds are benchmarking data quality, with 26 funds/products included in the past 12 months.
The Benchmark, which is updated twice a year, is available on the ASFA website.
