Issue 538, 27 May 2014
In this issue:
- Changes to the SuperStream contributions data standards implementation arrangements
- Deferral of SRS 711.0 SuperStream Benchmarking Measures
Changes to the SuperStream contributions data standards implementation arrangements
On 26 May 2014, the Minister for Finance, Senator the Hon Mathias Cormann, announced the Federal Government is increasing flexibility for the superannuation industry, as it continues to make the necessary changes to implement the SuperStream contributions data standards.
The changes, which give superannuation funds up to 1 July 2015 to meet the new standards, are reflected in the new data standards legislative instrument, which was registered today (27 May). This is the finalised version of the March 2014 further consultation draft legislative instrument.
ASFA has strongly advocated for this change, as it will help facilitate a smoother implementation of the contributions data standard.
The change removes the requirement that funds approach APRA to obtain approval if they will not be ready to receive contributions in the data standards format by 2 November 2014. Instead, they must notify the Australian Taxation Office (ATO) of a later compliance date.
ASFA understands the process of notifying the ATO will operate as follows:
- A fund seeking a later implementation date must notify the ATO of the proposed implementation data by 30 September 2014.
- The implementation date must be no later than 30 June 2015.
- When making the notification, the fund must provide the ATO with its contributions data standard implementation plan. A pro-forma plan will be provided by the ATO, and the fund will be required to set out key milestones and dates.
This change means funds that are not ready by 2 November 2014 will no longer need to implement an interim solution from November 3 until the date the fund is ready. ASFA understands that these interim solutions involve costly, labour intensive, work-around processes. The fund will instead be able to focus on the core task of introducing a system that integrates the front-end data-receiving capability with back-end processes.
From an ASFA perspective, this puts control of the implementation process back into the hands of individual funds. However, the superannuation industry will need to work co-operatively with employers and service providers, as well as with the ATO, to ensure that implementation progresses smoothly, and that full compliance by all parties is achieved by no later than 1 July 2015.
Funds should not take this change as a reason to delay. All funds should be targeting an implementation date that is as early as possible so that the returns on the industry’s investment can start to flow to all participants in the system. ‘Prepare now, implement early, avoid the last minute rush’ should be the mantra of all funds.
In advocating for the changes to the implementation process, ASFA considered that the implication for employers and providers of clearing services would be as follows:
- Providers of contribution clearing services
Through to at least the 30 June 2015, providers of contributions clearing services will need to maintain a capacity to deliver contributions data to funds in the following formats:
- In data standards compliant format, where the contribution destination is a fund whose status on the ATO’s Fund Validation Service (FVS) indicates that it can receive the data in that format.
- In an alternate electronic format, where such a channel exists to the destination fund.
- In a non-compliant format (paper), where destination funds do not have either of the above electronic capabilities.
In addition, they will need to monitor the FVS for changes in destination fund capabilities.
These service providers will also play a critical role in assisting funds to test their solutions in a live environment, but prior to the fund updating their receipt capability on the FVS.
- Employers
The ATO advises that for large and medium employers (that is, employers with 20 or more employees), the effective compliance date is 30 June 2015, although the legal compliance date remains as 1 July 2014. However, the date that individual employers actually comply with the data standard will depend on the date that they, or their service providers, are able to deliver data in accordance with the requirements of the data standard.Employers, and their service providers, need to be aware that they do not need to send data in accordance with the data standard, if the destination fund is unable to receive data in accordance with the standard. They also need to be aware that there are many service providers that can assist them to comply: payroll bureaus, payroll software companies, business software companies, commercial clearing houses and employer default fund clearing services.However, this does not mean that employers have nothing to do. In preparation for the commencement of the data standards employers should now be:
- working out how they will be able to comply by 1 July 2015:
- talk to your default fund about their implementation plans and how they can help the employers comply. Many funds currently have an employer portal, or offer a clearing service. Most of these are able to be used right through until July 2017, and many funds have plans to upgrade these services so that they can be used beyond that date
- if your fund does not offer a contribution clearing service, then talk to your payroll provider or business system software provider, and find out if they will be providing such a service
- make sure you are issuing new employees with the new choice of fund form from the ATO. The new form captures additional information, such as fund bank account details and fund product Unique Superannuation Identifier (USI) that will be needed to send data electronically to funds
- talk to your default fund to obtain their bank account details and the USI of the default super product
- amend your employee record keeping system to capture this new information for both existing and new employees, or, alternatively, talk to your business software provider about this additional need of employers.
What should funds be doing now?
ASFA considers that, as a minimum, funds should:
- review their implementation plans, in light of these changes, and amend or reconfirm their implementation timeline
- review or reconfirm their strategy for onboarding default employers
- ensure that the ATO’s FVS contains all of your products, their USI and bank account details
- review or prepare communications for default employers
- if the fund’s current solution is a compliant-bridging solution, the communication should:
- alert employers to the 1 July 2015 actual compliance date
- explain to them how the fund can assist them to meet their compliance obligation
- if the fund’s current solution is not a compliant-bridging solution:
- explain to employers the transition process the fund will be undertaking to move employers to a compliant solution (process and timeline) or
- advise employers of other alternatives the employer may consider (such as using a commercial clearing house, payroll software provider or payroll bureau).
Fund communications with employers should also contemplate that the recipient employer may be a small employer, and therefore have access to the ATO’s Small Business Superannuation Clearing House.
ASFA has been advised that a joint APRA/ATO letter will shortly issue to fund trustees setting out the changes and the expectations of trustees.
For further information contact Robert Hodge.
Deferral of SRS 711.0 SuperStream Benchmarking Measures
APRA has announced that, in view of the developments in the SuperStream implementation announced by Senator the Hon Mathias Cormann on 26 May 2014, and in consultation with Treasury and the ATO, it is deferring the commencement of SRS 711.0 until 1 July 2015. APRA is writing to all trustees today (27 May) to inform them of this decision, and to advise them of its proposal to consult further with the industry regarding the content of SRS 711.0 later in 2014.