Superannuation Industry Stewardship Group key messages 1 October 2019

Welcome and introduction

James O’Halloran opened the meeting with an acknowledgment of country, welcomed members, noted apologies and gave an overview of the scheduled agenda.

Productivity Commission response

Robert Jeremenko, Division Head, Treasury, led a discussion about the Government’s response to the Productivity Commission’s report on Superannuation: Assessing efficiency and competitiveness. One of the recommendations of that report was an independent review of the retirement income systemExternal Link which has now been announced by the Treasurer.

Outcome: Members were informed about the main points of the response and implementation.

Next steps: Member updates will continue at future meetings.

Superannuation environment and overview

The group reviewed the activities occurring across the superannuation industry into the future by way of reference to the Superannuation Strategic Map. This standing item outlines the key government agency programs of work, regulatory and agency reforms across the next 18 months.

Topics discussed included:

• un-enacted measures and proposed legislation
• Putting Members’ Interest First and Protecting Your Super
• review of retirement income
• capital gains tax (CGT) impacts on merged/rolled-over funds
• Financial Services Royal Commission recommendations regarding Code of Ethics and Approved Monitoring Schemes.

Outcome: Members were informed on the progress and discussed specific events of interest.

Next steps: The strategic map will continue to be updated and time set aside at future meetings to discuss.

ATO update

James O’Halloran, Deputy Commissioner, ATO, updated the group on:

• Single Touch Payroll implementation and its impact on improving Tax Time
• AusKey to be replaced by digital services (myGovID and RAM) in March 2020
• superannuation guarantee (SG) amnesty
• proactively reuniting unclaimed super accounts

Outcome: Members were informed on the progress of ATO activities.

Next steps: Members to be kept informed of the changes that impact the superannuation industry.

Member updates

Glen McCrea, Deputy Chief Executive Officer and Chief Policy Officer, Association of Super Funds of Australia (ASFA), noted that the legislative priorities for the government mirrored those of ASFA. Glen also noted the ASFA Conference in Melbourne on the 13–15 November 2019.

David Knox, Senior Partner, Mercer, discussed the forthcoming release of the annual Melbourne Mercer Global Pension Index due on 21 October 2019 and the addition of data from three new countries including Thailand, Philippines and Turkey. Among other measures, the report discusses the correlation between household debt and pension assets, expressed as a percentage of gross domestic products (GDP).

Outcome: Members were informed about priorities of other parts of the industry.

Next steps: Member updates will continue at future meetings.

Member outcomes tools and analysis

Alison Bliss, Senior Manager Data Analytics, Australian Prudential Regulation Authority (APRA), and Helen Rowell, Deputy Chair, APRA, discussed the release of a heat map on the performance of MySuper products with the first report in November/December 2019. The heat map will present data already published by APRA but in a different form. The intended audience for this report is trustees and not consumers.

The heat map will be a comparison of performance across three key areas:

• investments
• fees and costs
• sustainability.

Each area will have multiple measures; for example, investment performance will include net returns and risk adjusted returns (compared to a reference portfolio). APRA has consulted with external experts on the methodology to ensure it is robust.

APRA does not intend to publish an overall product level rating. This is consistent with APRA’s intended use of the heat map – which trustees use it as a starting point to undertake deeper analysis, consistent with APRA’s requirements set out in Superannuation Prudential Standard SPS 515. Trustees where multiple measures show poorer performance will be contacted prior to the release of the report. APRA is planning to extend the heat map to choice products once data is available. In addition, further iterations are likely to include insurance measures and other refinements.

Outcome: Members were given an outline of the APRA tool.

Next steps: Members to be kept informed of the implementation and future versions of the tool.

Update on Prudential Framework for member outcomes

Heidi Richards, General Manager, APRA, gave an update on Superannuation Prudential Standard SPS 515 Strategic planning and member outcomes that set out requirements for a Registered Superannuation Entity (RSE) licensee to regularly assess the outcomes provided to members and identify opportunities for improving these outcomes, supported by sound strategic and business planning.

Its objective is to ensure that strengthening member outcomes is central to an RSE licensee’s business operations. It is effective from 1 January 2020.

Superannuation Practice Guide SPG 516 is out for consultation until 10 October 2019 and will be finalised by the end of 2019.

Outcome: Members were informed on the progress of SPS 15 and SPG 516.

Next steps: Members to be kept informed of the engagement and roll-out.

Discussion with Assistant Minister for Superannuation, Financial Services and Financial Technology

Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator the Hon Jane Hume discussed with the members the future direction of superannuation.

Wrap up and close

James O’Halloran, ATO, thanked the members for their input and noted the next meeting date.

Attendees

Apologies