The last month has seen a distinct move from APRA to resume its regulatory agenda, and superannuation bills have started to move through Parliament again. Although the impacts of COVID-19 are ongoing, it’s clear that some normality is returning to the regulatory environment.
The Government has announced an extension of temporary relief measures designed to provide certainty to businesses about how they can meet certain obligations under the Corporations Act 2001 during the pandemic. The relief, which will now expire on 21 March 2021:
- gives certainty that when company officers sign a document electronically, the document has been validly executed
- ensures that companies and other entities that are required to or wish to hold a meeting, such as an Annual General Meeting, may do so using technology rather than face-to-face meetings
- enables a quorum, votes, notices and the asking of questions at the meeting to be facilitated electronically and allow for information required for the meeting to be circulated and accessed electronically.
The Opposition asked the Australian National Audit Office (ANAO) to review the integrity and performance of the Coronavirus early release initiative, citing theft and fraud issues, the lack of a verification mechanism for access to the initiative, inaccurate and misleading promotion of the scheme and a ‘blowout’ in estimates of how much superannuation would be withdrawn. The Auditor-General resolved not to commence an audit of the initiative, based on his assessment that the matters raised are “not a higher priority” than other topics already included in the ANAO’s annual audit work program for 2020-21.
APRA has continued to provide weekly reporting in relation to payments made under the early release initiative. Data published at the end of August showed that up to 23 August, payments totalling $32.2 billion had been made under the scheme.
The latest APRA Insight newsletter has a COVID-19 focus, with feature articles on operational resilience and managing superannuation fund liquidity in the midst of COVID-19. The newsletter also outlines how APRA has adapted to remote supervision during the pandemic.
APRA announced it will recommence its prudential policy program, after the majority of its planned policy and supervision initiatives were suspended in March in response to the COVID-19 pandemic.
APRA has indicated it will restart a narrowed-down version of its policy agenda, focusing on a small number of high-priority prudential policy reforms for the remainder of 2020. Of particular relevance to superannuation, this will include consultations on:
- the prudential standard for insurance in superannuation
- updated guidance on the sole purpose test
- data collections, including the recommencement of the Superannuation Data Transformation project
- the cross-industry prudential standard for remuneration.
Superannuation bills update
The first sitting of the Spring session of Parliament has concluded, with progress made in relation to a number of superannuation bills. Parliament will sit again from 6 October, when the 2020-21 Budget—which was delayed due to the COVID-19 pandemic—is due to be delivered.
Extending choice of fund
Amendments to extend choice of fund have completed their passage through Parliament and received Royal Assent as the Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020 was passed with an amendment to change the date of effect, so that choice will now apply to new workplace determinations and enterprise agreements made on or after 1 January 2021 (rather than 1 July 2020). A further amendment will require APRA to conduct a review of the new extended choice arrangements within 30 months of their commencement, to identify any unintended consequences. A number of other amendments proposed by the Opposition and crossbench were not accepted.
Bring forward arrangements
The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 has been passed by the House of Representatives and awaits consideration by the Senate.
This Bill contains an amendment extending the bring forward arrangements for non-concessional contributions to individuals under age 67, as announced in the April 2019 Budget. The amendment is intended to commence on the first 1 January, 1 April, 1 July or 1 October after the amending Act receives Royal Assent and, once law, the amendment will apply to non-concessional contributions made from 1 July 2020. (Related amendments to increase the age at which the work test starts to apply to voluntary contributions from 65 to 67, and increase the cut-off age for spouse contributions from age 70 to 75, were recently implemented via the Superannuation Legislation Amendment (2020 Measures No. 1) Regulations 2020.)
The Opposition unsuccessfully sought to amend the Bill in the House of Representatives to include a statement calling on the Government to “ensure that all Australians can enjoy a dignified retirement”, including by committing to the scheduled and legislated increases to the Superannuation Guarantee and to adequate funding for the Aged Pension.
The Bill was passed by the House of Representatives without amendment and is awaiting consideration by the Senate, where the One Nation party intends to move amendments that would, at a high level:
- progressively increase the concessional contributions cap by $10,000 each year from ages 67-71
- allow individuals who have utilised the Coronavirus early release initiative to make ‘recontributions’ that do not count toward their non-concessional contributions cap
- provide that an individual will not have excess concessional contributions as a result of their employer making the contribution required of them under an ‘approved workplace superannuation scheme’. This would only apply if the individual’s salary or wages from the employer is under $300,000 in a financial year and the required employer contribution is no more than 16 per cent of that salary or wages.
SMSFs and small APRA funds: member limit
The Government has introduced amendments to give effect to its 2018-19 Budget commitment to increase the maximum number of members permitted in a self-managed superannuation fund (SMSF) or small APRA fund from four to six.
The amendments, contained in the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020, will apply from the start of the first quarter commencing after the Act receives Royal Assent. See ASFA Action issues 766, 763 and 669 for background in relation to this measure, which was originally intended to apply from 1 July 2019.
APRA has resumed the consultation process on its Superannuation Data Transformation Project, after a break due to the COVID-19 pandemic. Four consultation packages have been released to complete phase 1 of the project, which deals with the breadth of APRA’s reporting. These cover expense reporting, asset allocation, insurance arrangements and fees and costs. Each includes a topic paper, draft reporting standards and a pilot data request, and submissions are due on dates ranging from 2 October to 13 November.
APRA has confirmed that it will release a refreshed MySuper product heatmap in December 2020 and has published a set of frequently asked questions (FAQs) about the upcoming release. These indicate that the heatmap will “show the outcomes being delivered to MySuper members” in the areas of investment performance and fees and costs and “provide indicators of trends in a trustee’s operations relevant to the sustainable delivery of member outcomes”.
The ATO has issued CRT Alert 041/2020, advising that the deadline for including SMSF rollovers in SuperStream will move from 31 March 2021 to 30 September 2021, as part of the industry’s implementation of version 3 of the SuperStream rollover message. According to the Alert, trustees have been advised that:
- the ATO and APRA support an extension to the transition period for funds to move to version 3 of the SuperStream rollover message from 31 March 2021 to 30 September 2021
- APRA encourages trustees to comply with the version 3 requirements as soon as possible, but “does not expect failure to comply with these requirements to be reported as a breach prior to 30 September 2021”.
The ATO has relaunched its SuperMatch service, which provides information to help funds consolidate accounts for their members, with a substantially updated set of terms and conditions and user guide. SuperMatch was suspended in May due to concerns that “potentially fraudulent online account creation” was occurring within some funds. The ATO, APRA, ASIC and AUSTRAC subsequently engaged with industry to develop new protocols for the use of SuperMatch. The ATO’s CRT Alert 040/2020 explains the changes as involving a requirement to undertake a prescribed minimum level of customer verification before using SuperMatch, with an ongoing obligation for trustees to ensure their connection to the service remains compliant. Trustees will need to engage with the ATO to re-establish their connection to SuperMatch.