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Issue 811, 29 June 2021 
In this issue: 


Superannuation data to drive research and advocacy: EOI for ASFA Data Working Group 

ASFA is seeking to establish a new data working group to support its research and advocacy on core policy issues. The purpose of the working group is to drive the achievement of industry level policy objectives through enhanced data aggregation and use, including: 

Participation from across the sector will be needed to access the breadth of data required to make meaningful representations on behalf of industry. If you, or a member of your organisation, are interested in joining ASFA’s Data Working Group, please contact Julian Cabarrus by close of business Friday 16 July. Please note participation is available for representatives of ASFA corporate members only. 


APRA remuneration requirements: draft Prudential Practice Guide – reminder 

As reported in ASFA Action issue 802, APRA has released for consultation a draft prudential practice guide on remuneration, which sets out principles and better practice examples to assist entities in meeting the requirements proposed in the new prudential standard, CPS 511 Remuneration.

If you have any feedback you would like ASFA to consider in responding to APRA, please forward it to Maggie Kaczmarska by close of business Friday 9 July. 


Climate change financial risks: APRA consultation – reminder 

As reported in ASFA Action issue 800, APRA has released draft Prudential Practice Guide CPG 229 Climate Change Financial Risks (PPG) for consultation. 

The draft PPG is designed to assist APRA-regulated entities in managing climate-related risks and opportunities as part of their existing risk management and governance frameworks under Prudential Standards CPS 220 Risk Management, SPS 220 Risk Management, CPS 510 Governance and SPS 510 Governance. 

If you have any feedback you would like ASFA to consider in relation to the draft PPG, please forward it to Maggie Kaczmarska by close of business Friday 9 July. 


Royal Commission implementation: advice Bill introduced and referred to Committee 

The Government has introduced into Parliament a new Bill to strengthen the financial advice sector. In December, the Government announced that FASEA will be wound up and its standard-making functions moved to be the responsibility of the Treasurer, supported by Treasury. ASIC will be responsible for administration of the adviser exam. In addition, tax (financial) advisers will no longer be regulated by the Tax Practitioners Board but instead will be regulated only under the Corporations Act 2001, consistent with the recommendation made by the Tax Practitioners Board Review (see ASFA Action issue 787 for background). 

The Government has now introduced a Bill to implement aspects of these announcements. The Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 will implement the Government’s response to recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation & Financial Services Sector, which proposed the establishment of a single disciplinary body for financial advisers and recommended that all financial advisers who provide personal financial advice to retail clients be registered. 

The Bill contains amendments to: 

The Bill has been referred to the Senate Economics Legislation Committee for report by 28 July, with submissions due by 9 July. If you have any feedback you would like ASFA to consider in relation to the Bill, please forward it to Maggie Kaczmarska by close of business Friday 9 July. 


Intergenerational Report 

The Government has released the 2021 Intergenerational Report (IGR), which projects an outlook for the economy and the Australian Government’s budget over the next 40 years. 

According to the Treasurer, the IGR delivers three key insights: 

Some key insights from the IGR in relation to superannuation include: 

The IGR is issued every five years. This edition was due to be delivered last year but was delayed due to the impacts of the COVID-19 pandemic. 


Superannuation pensions: reduction in minimum drawdown for 2021-22 

The Government has registered regulations giving effect to its recent announcement that it would continue the temporary reduction in minimum drawdown rates for some superannuation pension types for a further year, to 30 June 2022. 

The minimum drawdown rates for account-based pensions, allocated pensions and market linked pensions (and equivalent annuity products) were reduced by 50 per cent for the 2019-20 and 2020-21 income years as part of the Government’s response to the COVID-19 pandemic. In late May, the Government announced the reduction would be extended for the 2021-22 income year (see ASFA Action issues 743 and 807). 

The Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 give effect to that extension. According to the explanatory material, the measure “is designed to continue to assist pension and annuity account balances to recover from capital losses associated with the economic impact of the pandemic, by allowing retirees to adjust their drawdowns from their depreciated asset holdings and avoid being forced to sell assets in a loss position to fund income stream payments.” 


Miscellaneous amending regulations 

The Government has registered regulations making miscellaneous amendments to a range of Treasury portfolio regulations, including some that are of relevance for superannuation and the provision of financial advice. 

In particular, the Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2021 make the following amendments: 

The aspects of the regulations dealing with fee refunds were the subject of consultation during May — see ASFA Action issue 804 for details. The aspects relating to fee disclosure statements were not included in the May consultation but were announced by the Government on 11 June — see ASFA Action issue 809 for details. 


Superannuation Bills update 

The Bills to implement a number of superannuation measures recently passed by Parliament have now received Royal Assent and become Acts. These include: 

In addition, the Financial Regulator Assessment Authority Bill 2021 and the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 have now been passed by Parliament and are awaiting Royal Assent. These Bills establish the Financial Regulator Assessment Authority (FRAA) as a new statutory body to assess the effectiveness and capability of APRA and ASIC. During debate on the Bills, amendments were made that impact the potential membership of the FRAA, but not its role or powers. (See ASFA Action issue 807 for background.) 

Parliament has now completed its winter sittings and will resume on 3 August. 

Noteworthy Bills that remained before Parliament when it rose for its break include: 


Personal transfer balance caps: availability on ATO online 

The ATO has advised that individuals will be able to view their personal transfer balance cap in ATO Online from 5 July. 

As reported in ASFA Action issue 792, the superannuation general transfer balance cap will be indexed on 1 July 2021, and individuals will have a personal transfer balance cap between $1.6 and $1.7 million. This personal transfer balance cap is based on the highest ever balance of an individual’s transfer balance account between 1 July 2017 and 30 June 2021.

Individuals will be able to view their personal transfer balance cap in ATO Online from 5 July, and their agents will be able to view this information in Online Services for Agents. 


Using technology to hold meetings and sign documents: consultation 

Treasury has released exposure draft legislation outlining reforms to facilitate companies and their officers using technology to satisfy certain requirements in the Corporations Act 2001. The proposed reforms will make permanent the temporary measures put in place during the COVID-19 pandemic relating to electronic execution of company documents and meeting notifications. While not specific to superannuation, these reforms are relevant to the way in which superannuation trustee companies manage their general obligations under the Corporations Act 2001. 

In particular, the proposed reforms will facilitate the use of technology in meetings, to execute company documents and send meeting-related materials. The exposure draft makes it clear that companies can hold hybrid meetings, and that members, as a whole, must be given a reasonable opportunity to participate in meetings whether the meeting is a physical meeting, a hybrid meeting or a virtual meeting. The exposure draft also proposes some additional amendments in relation to the conduct of company meetings.

Treasury is seeking comments by close of business 16 July. 

There have been a number of announcements and legislative instruments in relation to these matters since the start of the COVID-19 pandemic. These include temporary relief given in relation to electronic execution of documents — which expired on 21 March — and in relation to virtual meetings — which was recently extended by ASIC. The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 was intended to extend the relief for both these measures until 15 September 2021 pending the finalisation of permanent reforms. That Bill was not passed and remains before the Senate. See ASFA Action issue 797 for background on these developments. Given the complexity of this situation, ASFA members may find the below extract from the explanatory memorandum to the new exposure draft legislation useful, as it provides a summary of the past developments and highlights a change in approach since Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 was drafted:

“During the COVID-19 pandemic the Government provided temporary relief (in the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 and Corporations (Coronavirus Economic Response) Determination (No. 3) 2020) to allow meetings of companies and registered schemes to be held virtually using video-conferencing technology and extend the statutory mechanism for the execution of company documents to include electronic execution. This relief expired on 21 March 2021. 

The Government has introduced legislation into Parliament to allow companies and registered schemes to hold virtual meetings and electronically sign documents until the end of 15 September 2021 (Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021). 

On 17 February 2021, the Government announced its intention to make permanent changes relating to the execution of company documents and the electronic communication of meetings-related materials. It also announced that it would conduct a 12-month review of hybrid meetings of companies and registered schemes. 

The Bill makes changes to the Act to give effect to that announcement. It refines the drafting approach taken in Treasury Law Amendments (2021 Measure No. 1) Bill 2021 by restructuring the rules so that they apply to all types of meetings.” 


SMSF income streams: social security instrument 

The Government has issued a legislative instrument relating to the commutation of certain income streams paid by self-managed superannuation funds (SMSFs) and small APRA funds (SAFs), replacing two older instruments that are due to sunset (expire). 

Some income streams sourced from a SMSF or SAF that commenced payment before 19 September 2007 can be either 100 or 50 per cent exempt from the social security assets test in certain circumstances. That exemption was retained if the original income stream was commuted, provided the new income stream complies with detailed requirements provided for in social security determinations. These requirements include commuting the income stream and purchasing a similar income stream product from a retail provider — typically because the SMSF or SAF is no longer able to meet a ‘high probability’ actuarial test in the Social Security Act, which requires that the provider of the income stream will be able to pay the income stream as required. 

Where an income stream does not meet the high probability test, it may be restructured by purchasing a retail asset-test exempt product (which will comply with the requirements of the social security law). In these circumstances, the income stream will continue to be assessed as asset-test exempt. Alternatively, the income stream may be restructured into a market-linked income stream either from a retail provider or within the SMSF/SAF, however it will not meet the conditions for asset test exemption. 

Under the social security law, restructuring an income stream which was sourced from a SMSF/SAF to a market-linked income stream will mean the difference between the amount that has been paid by way of income support where the income stream was asset-test exempt and the amount that would have been payable had the income stream been asset-tested, is a debt due to the Commonwealth. 

The Social Security (Waiver of Debts – Self Managed Superannuation Funds and Small APRA Funds (FaHCSIA) Specification 2011 and the Social Security (Waiver of Debts – Self Managed Superannuation Funds and Small APRA Funds (DEEWR) Specification 2011 currently provide for the waiver of those debts by the Commonwealth, provided a number of conditions are met. Those instruments are due to sunset on 1 October. The Government has now registered the Social Security (Waiver of Debts – Self Managed Superannuation Funds and Small APRA Funds) (DSS) Specification 2021 to repeal and remake those instruments and maintain the waiver. 




ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations

and other regulatory announcements relevant to superannuation.

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