Issue 756, 25 May 2020
In this issue:
- COVID-19 Coronavirus: early release of super – APRA data, ASIC FAQs
- COVID-19 Coronavirus: updated ASIC FAQs
- COVID-19 Coronavirus: deferral of retirement income framework legislation
- Retirement Income Review: report date extended
- ATO SuperMatch service suspended
- Derivative transaction reporting: ASIC intentions re exemptions due to expire
COVID-19 Coronavirus: early release of super – APRA data, ASIC FAQs
APRA has today made its fourth weekly publication of industry-level data from its early release initiative (ERI) data collection.
The data shows that as at 17 May:
- 1.41 million applications had been made, for a total of $10.6 billion in payments
- the average payment has been $7,510
- a total of 1.59 million applications had been received
- payments to eligible members have taken an average of 3.3 business days after receipt of the application from the ATO and 94 per cent have been made within five business days.
APRA has also published the third 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.
ASIC has updated its superannuation frequently asked questions (FAQs) to address:
- whether trustees need to issue an exit statement to members who have a zero balance due to accessing the COVID-19 early access to superannuation scheme, and if so when (new FAQ 1A)
- ASIC’s expectations of trustees in communicating to members who have a zero or low balance due to accessing the COVID-19 early access to superannuation scheme (new FAQ 1B).
COVID-19 Coronavirus: updated ASIC FAQs
ASIC has updated its FAQs about current superannuation regulatory issues that have arisen from the COVID-19 pandemic.
The three new FAQs, published on 19 May, address:
- whether trustees need to issue an exit statement to members who have a zero balance due to accessing the COVID-19 early access to superannuation scheme, and if so when (new FAQ 1A)
- ASIC’s expectations of trustees in communicating to members who have a zero or low balance due to accessing the COVID-19 early access to superannuation scheme (new FAQ 1B)
- what ASIC expects of trustees in communicating to their members about the impact of COVID-19 on their insurance inside superannuation (new FAQ 1C).
COVID-19 Coronavirus: deferral of retirement income framework legislation
The Government has announced that it is deferring the introduction of its proposed retirement income covenant, which would have required fund trustees to offer a ‘comprehensive income product for retirement’ (CIPR). The covenant was previously intended to commence on 1 July 2020.
Superannuation laws currently require trustees to formulate, review and give effect to investment, risk management and insurance strategies. In response to the Financial System Inquiry (FSI), the Government agreed to introduce a retirement income covenant – an additional obligation for trustees to formulate a retirement income strategy for their members. It also agreed to support the development of more efficient retirement income products, which the FSI labelled CIPRs.
Since the FSI, the Government has consulted on the best way to support the development of CIPRs. The Government announced a Retirement Income Framework, intended to increase individuals’ standards of living in retirement, increase the range of retirement income products available, and empower trustees to provide members with an easier transition into retirement. For background on the retirement income framework and CIPRs, see ASFA Actions issues 671, 669 and 617.
The Government has now announced that it has deferred its planned introduction of the retirement income covenant from 1 July 2020, ‘to allow continued consultation and legislative drafting to take place following the Coronavirus crisis’. The deferral ‘will also allow drafting of this measure to be informed by the Retirement Income Review’ (the date by which the Review will be provided to Government was recently extended to 24 July).
The revised date for the covenant will be determined following further consultation.
The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator the Hon Jane Hume, said the Government has been ‘working for some time on a Retirement Income Covenant. While efficient accumulation is imperative and we are steadily chipping away at the inefficiencies of that part of the system, we need to build a smoother transition from the accumulation to the de-accumulation phase’. She noted that there is ‘nothing stopping funds and their trustees from developing retirement income strategies now and we’d encourage them to do so. Trustees don’t need to wait for us to legislate the Covenant’.
Retirement Income Review: report date extended
The Government has extended the reporting timeframe for the Retirement Income Review.
The Review, announced in September 2019, is a broad assessment of the system designed to establish a fact base to improve understanding of how the system currently operates and the outcomes it is delivering to Australians. (See ASFA Action issues 728 and 722).
The Review was due to deliver its report to the Government by June 2020. Late last week, media reports indicated this had been extended to “no later than 24 July” and ASFA has confirmed this with the Review secretariat.
ATO SuperMatch service suspended
On 19 May, the ATO and APRA issued a joint message to superannuation trustees regarding SuperMatch, which is an ATO service that provides information to help funds consolidate accounts for their members.
The joint message stated as follows:
Information was provided to the ATO and APRA late last week which raised concerns that potentially fraudulent online account creation is occurring within some funds. This activity has implications for access to SuperMatch.
The ATO and APRA’s preliminary enquiries into the reported incidents have highlighted that some funds’ online account creation controls were not sufficiently strong to prevent potentially fraudulent online account creation.
In the interest of protecting super funds and individuals, SuperMatch has been disconnected to all funds until such time as the superannuation industry can work with the ATO to provide increased certainty that they have mitigated the risk of weak online account creation controls.
The ATO, APRA, ASIC and AUSTRAC will be engaging with the industry this week to discuss options for how fund access to SuperMatch can be re-established based on improved online account creation controls across the industry.
While SuperMatch will be temporarily disconnected to all funds, individuals will continue to be able to consolidate their super in ATO Online via myGov, or by providing rollover details to their new fund so the rollover can be requested.
The ATO’s superannuation dashboard indicates that SuperMatch is unavailable while the ATO works with industry to implement some further controls on usage.
Derivative transaction reporting: ASIC intentions re exemptions due to expire
ASIC has written to ASFA outlining its intentions regarding a number of over the counter (OTC) derivative transaction reporting exemptions in the ASIC Corporations (Derivative Transaction Reporting Exemption) Instrument 2015/844 that are due to expire on 30 September.
The exemptions relate to:
- Exchange-traded derivatives (exemption 1)
- Name information (exemption 3)
- Privacy – consent for historical counterparties (exemption 4)
- Privacy – foreign privacy restrictions (exemption 5)
- FX securities conversion transactions (exemption 9)
If you have any feedback on ASIC’s proposals, please provide it directly to ASIC, via otcd@asic.gov.au, by 26 June.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
