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Issue 717, 31 July 2019 
In this issue: 

 

Superannuation guarantee/salary sacrifice amendments: Senate Economics Committee 

The Government has re-introduced into Parliament amendments to the Superannuation Guarantee (SG) legislation to ensure an individual’s salary sacrificed contributions cannot be used to reduce their employer’s SG obligations. 

The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 proposes amendments to the Superannuation Guarantee (Administration) Act 1992 to: 

The amendments proposed by the Bill will apply in relation to working out an employer’s SG shortfall for quarters beginning on or after 1 July 2020. 

The Bill has been referred to the Senate Economics Legislation Committee for inquiry and report. If you have any feedback that you would like ASFA to consider in relation to the SG/salary sacrifice amendments, please forward it to Julia Stannard by close of business Monday, 12 August. 

The amendments were previously contained in the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017, with a commencement date of 1 July 2018. That Bill lapsed when Parliament was prorogued ahead of the Federal Election. (See ASFA Action issue 644 for background.) 

 

 

Remuneration prudential standard: APRA consultation 

APRA has commenced consultation on proposed new prudential requirements for its regulated entities—including superannuation funds—in relation to remuneration. 

The consultation package comprises a discussion paper Strengthening prudential requirements for remuneration and a draft of proposed new prudential standard CPS 511 Remuneration. APRA’s proposed new requirements are intended to better align the remuneration frameworks of regulated entities with the long-term interests of entities and their stakeholders, including customers and shareholders. 

The proposed reforms address a number of recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. According to APRA, the proposed measures are materially more prescriptive than APRA’s existing remuneration requirements and will place Australia in line with better international remuneration practice. 

Among the key reforms, APRA is proposing to: 

APRA intends to release the final prudential standard before the end of 2019, with a view to it taking effect in 2021 following appropriate transitional arrangements. 

If you have any feedback that you would like ASFA to consider in relation to the proposals, please forward it to Maggie Kaczmarska by close of business Wednesday, 25 September. 

 

 

Influencing employers’ superannuation fund choice: ASIC guidance 

ASIC has published guidance for trustees of regulated superannuation funds, and their associates, in relation to the prohibition on influencing employers’ choice of a default superannuation fund for their employees. 

The prohibition is set out in section 68A of the Superannuation Industry (Supervision) Act 1993 (SIS Act) and was recently amended by the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019(see ASFA Action issue 698 for background). In particular, the scope of the prohibition and the penalties for non-contravention were strengthened following recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

In general terms, section 68A now prohibits a trustee or its associate from engaging in particular conduct if it would reasonably be expected to influence an employer to choose a default fund for employees or encourage employees to choose or retain membership of a fund. The relevant prohibited conduct is: 

ASIC’s guidance is set out in Information sheet 241. 

The information sheet explains: 

 

 

Opt-in insurance: ‘Putting Members’ Interests First’ 

A Parliamentary Committee examining the Government’s latest reforms around opt-in insurance has recommended they proceed, with commencement deferred to 1 December. 

As outlined in ASFA Action issue 715, in early July the Government introduced into Parliament a new bill to progress insurance reforms that were removed from its ‘Protecting Your Superannuation Package’ legislation by the Senate. 

The Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 (PMIF Bill) seeks to implement provisions, with effect from 1 October, making insurance opt-in for members under age 25 and low-balance accounts. These measures were removed from the bill implementing the Government’s PYS reforms when they were legislated earlier this year. 

The PMIF Bill remains before the House of Representatives, awaiting debate. The Senate Economics Legislation Committee has considered the Bill and recommended that it be passed, with the commencement date for the reforms deferred to 1 December. 

 

 

Partial superannuation guarantee opt-out 

The Government has re-introduced into Parliament amendments to implement a partial opt-out from superannuation guarantee (SG) for eligible individuals with multiple employers. 

An individual who has multiple employers will be able to apply to the ATO for an SG exemption certificate, exempting an employer from SG liability for a particular quarter. A certificate can only be issued by the Commissioner of Taxation where a number of conditions are met, including: 

The amendments are included in the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019 and will apply for SG quarters commencing on or after 1 July 2018. 

The partial opt-out was announced in the 2018-19 Budget (see ASFA Action issue 669) and is intended to reduce the likelihood of an individual inadvertently breaching their non-concessional contributions cap as a result of receiving mandated SG contributions from multiple employers. The explanatory material to the Bill notes that instead of receiving SG contributions, an individual who has taken advantage of the partial opt-out may negotiate with their employer to receive additional cash or non-cash remuneration. 

The amendments were previously included in the Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018, which lapsed when Parliament was prorogued ahead of the Federal Election. (See ASFA Action issue 672 for background.) 

 

 

Integrity amendments for 2016-17 Budget reforms 

The Government has re-introduced into Parliament amendments to support the integrity of the reforms introduced in the 2016-17 Budget. 

The measures, included in the Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2019: 

The amendments apply in relation to income derived in the 2018-19 and later income years, regardless of whether the scheme was entered into before 1 July 2018. 

The amendments apply to borrowings arising under contracts entered into on or after 1 July 2018. They do not apply to borrowings arising under a contract that was entered into prior to 1 July 2018, or to refinancing of the outstanding balance of borrowings arising under contracts entered into prior to 1 July 2018. 

These amendments were announced in the 2017-18 Budget and were previously included in the Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018. That Bill lapsed when Parliament was prorogued ahead of the Federal Election. (See ASFA Action issue 672 for background.) 

 

 

New APRA data collection solution: implementation plan 

APRA has released an updated Implementation Plan for its new data collection solution, which will replace the current Direct to APRA (D2A) system. 

The Implementation Plan provides guidance to the industry about the changes and how to prepare for the new solution. The key updates relate to: 

 

 

Investments and the retirement phase: new ASFA paper 

ASFA has published a new paper on the importance of adopting an increasingly sophisticated and long-term approach to the provision of retirement outcomes. 

The paper, The retirement outcomes continuum: a strategic approach to investments and the retirement phase, looks at what fund trustees should consider when developing strategies that improve retirement outcomes. It notes that: 

The paper emphasises the importance developing and sustaining a long-term approach to investing to build wealth for members, and the importance of member engagement and new models of financial advice to help members form reasonable expectations of their income in retirement based on their specific circumstances and preferences. 

The ASFA secretariat developed the paper with the ASFA Economics Investment Policy Council. 

 

 

ASFA REGULATORY WATCHLIST

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

and other regulatory announcements relevant to superannuation.

 

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