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ASFA in Focus July 2021

Policy update | Government and regulator interaction | Research and submissions | Media | Events and Learning

Policy update

Glen McCrea, ASFA Deputy CEO and Chief Policy Officer, provides a policy update:

Government and regulator interaction

The Your Future, Your Super (YFYS) Bill passed both Houses of Parliament mid-June and has since received royal assent. While our advocacy since the announcement of the YFYS package in October 2020 delivered amendments to the Bill and regulations, such as the inclusion of revised infrastructure and property benchmarks and administration fees, we are now turning our focus to the draft YFYS regulations.

We will be working closely with the Government and regulators to help ensure the YFYS regulations deliver the right outcomes for fund members. This includes, for example, advocating for changes to the current performance benchmark to reflect the impact of exogenous events such as the disruption to investment markets and the value of certain assets. To this end, we have a written a joint letter with ISA and AIST to APRA asking for guidance around the new best financial interests duty and the reversal of the evidential burden of proof.

As mentioned in last month’s ASFA in Focus, we attended a joint APRA and ASIC roundtable in May about the changes to the SIS Act that prohibit a trustee/director from using trust assets to pay a penalty incurred in relation to contraventions of Commonwealth law, with effect from 1 January 2022. Following the roundtable, we sent a letter to APRA, ASIC and Treasury proposing specific scenarios to test their comfort with these approaches.

APRA responded to our letter to advise that their expectation is that trustees come to a solution based on their circumstances, having taken reasonable and necessary steps to satisfy themselves they are compliant with their legal obligations. We’ll continue our discussions with APRA, ASIC, Treasury and our members on this issue.

With input from ASFA’s TMD Template Working Group, Deloitte and some feedback from ASIC, we have made available to our members a Target Market DeterminationTemplate to assist members with their Design and Distribution Obligations (DDO) regime obligations. The DDO regime is set to commence on 5 October.

We continued our discussion with ASIC about implementation of RG 271 Internal Dispute Resolution this month as we try to resolve these concerns before RG 271 comes into effect on 5 October 2021.

Research and submissions

Our newest research paper explores whether businesses generally have the capacity to absorb the increase in the SG rate from 9.5% to 10% on 1 July without cutting wages. Our analysis suggests that the SG rate increase represents a very small cost to business (about $6 a week for a worker on average wages), and businesses generally have the capacity to pay as employees haven’t been fully compensated for productivity increases in the economy over the last two decades.

After our meeting with Treasury in May to provide some preliminary feedback to their consultation paper on proxy advice, we provided Treasury a formal submission with the following comments:

  • The proposals seek to address a regulatory gap that doesn’t exist.
  • The proposal to provide companies with a right of review over proxy advice compromises the independence of the advice and embeds a conflict in the decision-making process.
  • The proposals increase regulatory cost and complexity without delivering a commensurate benefit to fund members.

We also provided a submission to Treasury in response to their discussion paper about the proposed financial institutions supervisory levies for 2021-22. Our main concern was that the discussion paper didn’t provide enough detail for industry to understand how the 2021-22 levies are determined and how they are allocated between the different agencies.


Our submission to Treasury in response to their consultation paper on proxy advice was featured in an article in the AFR.

Our newest research paper on businesses’ capacity to absorb the SG increase was also featured in articles in The The Australian, Money Management, Financial Standard, Investor Daily, Yahoo!news and the AFR.

Our media release on superannuation funds’ annual returns for FY2021 was also quoted in The West Australian and Money Management. Various pieces of our research and data were also featured in articles in The Age and the AFR.

With the passage of the YFYS Bill, we provided commentary on the performance test to Super Review.

ASFA’s Retirement Standard made appearances in articles by the ABC, SuperGuide, ABC Radio and SBS.

We also provided commentary to the Gold Coast Bulletin and Herald Sun about retirement balances in Australian cities/towns.

ASFA in the media

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