Superannuation Industry Stewardship Group key messages 27 February 2020

Welcome and introduction

David Knox, Senior Partner, Mercer, opened the meeting with an acknowledgment of country, welcomed members, noted apologies and gave an overview of the scheduled agenda.

David reminded members that Superannuation Industry Stewardship Group meetings are face to face.

MARIA Model

Rob Ewing and Martin Stevenson, Treasury, provided an overview of results from the Model of Australian Retirement Incomes and Assets (MARIA), Treasury’s long-term dynamic microsimulation model of Australia’s retirement income system.

Main points discussed during the presentation included:

• the Superannuation system in aggregate
• superannuation balances at retirement
• accumulation of Superannuation across a lifetime
• female labour force participation and retirement outcomes in Australia.

Members took the opportunity to enquire about the purpose of the model, the way the data was collected and interpreted, the sampling method, the assumptions, the demographics, the data sources and the projections.

Superannuation environment and overview

David Knox, Senior Partner, Mercer, noted the Superannuation System Strategic Map attached to the agenda, which covers the forward program of change impacting Australian Prudential Regulation Authority (APRA) funds, Individuals, SMSFs, Employers and Financial Intermediaries for the next 18 months.

In the discussion the following points were covered:

• The ATO noted the recent passing of the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, referred to as the superannuation guarantee (SG) Amnesty Bill, which is awaiting Royal assent (at time of meeting) and the passage of law facilitating the use of Single Touch Payroll by Services Australia.
• Treasury updated the group that the submissions for consultation on the Royal Commission close this week and the passing of the SG Amnesty Bill (subject to Royal assent). The law to facilitate closure of Eligible Rollover Funds is in the Senate and moving forward, noting an amendment has been proposed. Retirement review submissions are now closed and over 400 submissions were received. The panel will report to government at end of June 2020.
• Australian Securities and Investments Commission (ASIC) mentioned the timeframes for consultations on design and distribution and obligations, new fees and cost disclosure requirements in RG97 Disclosing fees and costs in PDSs and periodic statements, annual member meetings will be held from 1 July 2020 and that the first reporting date for portfolio holdings is 31 December 2020.
• APRA discussed its program of work in responding to its Post-Implementation Review of the superannuation prudential framework; the requirements of the new member outcomes legislation and prudential standard; and noted the last week of consultation on changes to the prudential standard on insurance in super, which respond to recommendations of the Royal Commission.
• The Australian Financial Complaints Authority (AFCA) provided an update on their role in relation to independent dispute resolution scheme for complaints about financial products and services (including some high level statistics for Superannuation complaints). AFCA’s approach to superannuation complaints about fees and charges was explained in response to a question. It was noted that AFCA has Bushfire disaster supportExternal Link and can help with claims.

Members noted the large amount of work in progress across the agencies and acknowledged the value in having a map of the forward program of work.

Heatmaps and enhanced data collection

Katrina Ellis, General Manager, Superannuation, APRA, provided members with an update on the Heatmap. Key points of discussion centred around the measurements, which included investment performance, fees, sustainability of member outcomes and expectations of trustees. The update included information about timelines, high level feedback to date and next steps.

Members discussed potential expansion of the use of the model, pooling versus individualisation of results, data integrity and what data is included, and potential interaction between this model and the Member Assessments.

Julia Horrocks, Manager, Superannuation Data Transformation, APRA, provided members with an update on Super Data Transformation. The presentation included the three phases of consultation around the key themes of breadth, depth and quality. The update included next steps.

Member update – SMSF Association

John Maroney CEO, SMSF Association (SMSFA), spoke about the SMSFA and the key themes discussed at their recent conferenceExternal Link on the Gold coast in February. Topics included:

• thought Leadership – what will the SMSF industry look like in 20 years
• how does the association keep a client-centric focus
• illegal Early release
• estate wind-ups and the Retirement Income Review.

The next SMSFA conference is February 2021 in Melbourne.

AUSkey transition to myGovID

John Dardo, Deputy Commissioner, Digital Delivery and Chief Digital Officer, ATO, provided members with an update about the AUSkey transition.

John reminded the group that AUSkey will no longer be available from 27 March 2020, and provided the current uptake figures (with a focus on the superannuation industry), dedicated support that is available for the superannuation industry and the communication and engagement activities delivered to date.

The decision to turn off AUSkey credential access to the Departing Australia Superannuation Payment (DASP) Portal from 14 March 2020 was also noted. Although many superannuation funds already have a myGovID credential, some do not. From today, Thursday 27 February 2020 an ATO “fast response” team will contact those funds who don’t have a myGovID and offer intensive support.

Member update – Consumer Choice and The Tax Institute

Xavier O’Halloran, Director, Super Consumers Australia, advised the members that their primary role is a consumer advocacy body. Their activities include fund and regulator advocacy, legal sector engagement, supporting Protecting Your Superannuation, investigative journalism, consumer advice and research and analysis.

Current areas of focus are insurance and superannuation protections around death and disability, unpacking and developing metrics for insurance products, superannuation fund performance issues and a member survey about the retirement system.

Phil Broderick, Principal, Sladen Legal, representing The Tax Institute (TTI), provided an overview of TTI which was established in 1943 and now has over 12,000 members. TTI seeks to improve tax law and administration on behalf of its members. Day to day activities include providing feedback to Government and regulators on tax rulings and draft legislation, noting what doesn’t work or could work better.

TTI runs a number of conferences, including the Tax Summit to be held in March 2020, and provides accreditation under its Chartered Tax Adviser Program. Two current areas of focus are the ATO’s binding and non-binding rulings and material and the rules around non-arm’s-length income expenses.

ATO Update

James O’Halloran, Deputy Commissioner, Superannuation and Employer Obligations, ATO, noted the ATO Progress Update and Protecting Your Super (PYS) status report and highlighted:

• ATO has support in place for those impacted by bushfires and other natural disasters
• ATO is ready to administer the SG Amnesty once Royal Assent is received and there is a detailed communications plan and updates to be made on our website
• Single Touch Payroll is tracking well, with the majority of substantial employers on board and ongoing support being provided to support and assist the remaining small and micro employers to onboard
• Observations from PYS from the first scheduled statement day, including the volumes received, scale of proactive reuniting of accounts, payments made and matching rates. Also mentioned the support in place for the next scheduled statement day.

James updated the group of Senior Executive Staff appointments within the ATO. Sonia Corsini has been appointed Assistant Commissioner, Risk and Strategy Individuals following the retirement Graham Whyte earlier this year. Larissa Evans has been appointed Assistant Commissioner, Fund Services and Engagement, a position she has been acting in since June 2019.

Wrap up and close

David Knox, Senior Partner, Mercer, thanked the members for their input and noted that the next meeting is 15 May 2020 in Melbourne.

Attendees

Apologies