Superannuation Industry Stewardship Group key messages 25 August 2020

Welcome and introduction

David Knox, Senior Partner, Mercer, opened the meeting with welcome to country and welcomed members.

Retirement Income Review

David Knox advised the Retirement Income Review item will be set up as an out of session meeting with Chair of the Retirement Income Review, Mike Callaghan once the report is publicly released.

COVID-19 Early release of superannuation (ERS)

David Knox led a general discussion about ERS, lessons learnt and impacts on the industry. ATO provided an update on eligibility including voluntary disclosures and validation exercise. Australian Financial Complaints Authority provided some insights about the sorts of complaints they have been receiving. Members discussed the impacts on the industry and sought clarification where required.

Early access to super financial hardship

David Knox led the discussion about the early access to financial hardship where individuals need to contact their super funds to request access to their super. There was a discussion about the need for funds to prepare for more severe financial hardship cases if poor economic conditions continue.

Internal dispute resolution

Sarah Edmondson, Senior Executive Leader, Behavioural Research and Policy Unit, Australian Securities and Investments Commission (ASIC), provided an update about RG 271 Internal dispute resolution (IDR). The key changes are:

• IDR is now enforceable
• Maximum response times have been reduced. For Superannuation cases it is down from 90 days to 45 days. For all other cases, it is down from 45 days to 30 days.
• there is a greater focus on written reasons
• the requirement of clear lines of delegation.

ASIC will be reaching out to superannuation funds to help them understand potential gaps between their current IDR processes and new RG 271 requirements ahead of commencement of the new obligations in October 2021.

Superannuation environment and overview

Treasury provided an update.

• The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 was before the Senate but has since passed both Houses.
• The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 and Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020 are both before the Senate.
• The increase of SMSF members from 4 – 6 was scheduled to be introduced.
• Legislation to implement the Government’s response to the Financial Services Royal Commission is expected to be introduced into Parliament before the end of the calendar year.
• The Government is considering how to implement the Single Default System as agreed to in its response to the Financial Services Royal Commission.

Australian Prudential Regulation Authority (APRA) provided an update.

• On 10 August 2020, APRA announcedExternal Link they will recommence some public consultations on selected high priority policy reforms including Prudential Standard SPS 250 Insurance in Superannuation (SPS 250) and updated guidance on the sole purpose test and cross industry prudential standard for renumeration (Prudential Standard CPS 511 Renumeration).
• The original Sole Purpose Test circular is out of date. The Prudential Practice Guide is being re-written to include a principles-based approach that trustees can practically apply. Consultation with industry is scheduled to commence before the end of 2020.
• APRA have done some pandemic data collection – looking at monthly and quarterly data to provide key insights back to industry in September – October 2020.
• APRA is starting consultation on Superannuation Data Transformation. Four topics for consultation are to be released in the week of 24 August 2020, with staggered due dates for feedback on the topics.
• Prudential Standard CPS 515 Strategic Planning and Member Outcomes came into effect at the beginning of 2020. Business performance reviews are due 31 December 2020 and Outcomes Assessments are due February 2021.

ASIC provided an update.

• Design and Distribution Obligations will come into force from 5 October 2021. Final regulatory guidance will be released soon. The regime does not cover My Super products. There are some synergies with Member Outcomes regime.
• Portfolio holdings disclosure regulations have still not been made. ASIC communicated that it would defer the start date in light of the fact that there are no regulations and the challenges of COVID-19.
• ASIC is consulting in the next few months about further guidance on remediation.
• The transition period for RG 97 Disclosing fees and costs in PDSs and periodic statements has been extended; from 30 September 2020 funds can opt in for the PDS requirements but do not have to comply until 30 September 2022.
• There has been a media releaseExternal Link about insurance in super (compensation for smoker defaults) with an additional report on insurance in super issues to be published by the end of December 2020.
• ASIC is undertaking work in relation to access to advice/unmet advice needs.

ATO provided an update.

• The Superannuation Guarantee Amnesty finishes on 7 September 2020.
• The ATO is updating our Practice statement on Remission of Part 7 penalties to reflect the limit on the Commissioner’s ability to remit penalties for historical super guarantee (SG) non-compliance, where an employer fails to disclose information relevant to their historical SG shortfall.
• It was confirmed that the next Unclaimed Super Monies reporting and payment date 31 October 2020 will not be deferred.

Wrap up and close

David Knox thanked the members for their input and noted that we will meet for an out of session meeting when the Retirement Income Review is publicly released.

Attendees

Apologies