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  • Superannuation reforms in place and maturing

    James O’Halloran, Deputy Commissioner, Superannuation, ATO

    Keynote address to the Superannuation Industry Engagement Forum

    Delivering on the Future Now

    Wednesday 27 June 2018, International Convention Centre, Sydney

    (Check against delivery)

    Introduction

    Welcome to the first Superannuation Industry Engagement Forum for 2018, to those present and also to those joining us through our live streamingExternal Link.

    When we last convened this forum in August 2017, we recognised the journey, the efforts made and successes achieved.

    Our success is a result of positive collaboration, focus and joint commitment across the industry and from the ATO.

    You may recall at the last forum, I outlined that our common desire to:

    • better engage across industry and with fund members
    • deal with the convergence of many changes
    • Plan for the future.

    It is pleasing to observe that together, we have transformed these goals into tangible achievements such as:

    • continuing to bring together the Transaction Services Working Group to co-design, work through any issues and most recently, share learnings from the ATO and the first funds who onboarded to the Member Account Attribute Service (MAAS)
    • forming the APRA Fund Communications Reference Group to improve how we communicate, engage and collaborate
    • jointly participating in business continuity simulation
    • working together on emerging technologies such as the New Payment Platform and its implications for SuperStream
    • working to improve visibility for members of their contributions.

    So our purpose today is to share with you, from a range of perspectives, the roadmap for change and some context on the superannuation environment, which will no doubt impact us all.

    The reform journey we’ have all been on truly reflects transformational change by anyone’s measure.

    However, we need to remain focussed, confident and committed to ensure we continue to leverage our successes and build on our transformational pathway.

    In essence, as we move into 2018–19, reform remains as real as ever. As industry and the ATO seek to develop complementary pathways to support a super system that members value and benefit from in their retirement.

    While remaining conscious of the pending Productivity Commission Report, we must continue to examine, explore and progress the current ‘pathway to reform’ across a range of areas which intersect often through APRA funds.

    There is a lot planned and it is evident that what many of these changes share, is the intent to highlight how the super system operates and to ensure that decisions made are more visible to funds, members and regulators.

    Many of these matters are for government in terms of their broad policy settings. However, like you, we also need to plan and focus on what needs to be done next. It is therefore important to engage early and often, as we can’t achieve anything in isolation.

    On reflection, we could consider that the current cycle of super policy reform began in 2010–11 with a range of policy and legislative reform initiatives. Some key reforms have involved the ATO as a service provider or clarifier of the law.

    While we have tended to focus on SuperStream and related matters in these engagement forums, the broader reform phases must always be considered.

    Of course our common goal is a superannuation system agile enough to meet future expectations and at the same time complementary to broader opportunities that may present themselves.

    If we consider the changing context of SuperStream, it is worth recapping the reform agenda since 2010 in phases.

    Phase 1

    Phase 1 or what we call SuperStream is ongoing. It involved policy and legislative changes that tasked the ATO to design and deliver:

    • new enabling and digital services for interactions with funds
    • new data standards for contributions and rollovers between funds
    • improved and expanded provision of TFNs as a single identifier.

    Currently underway are more digital and enabling services allowing ATO-to-fund interactions.

    More recently as part of the 2018 Federal Budget, the government announced SuperStream was being extended to include SMSF rollovers, allowing SMSF members to initiate and receive rollovers electronically between an APRA fund and their SMSF.

    Phase 2

    Phase 2 of reform started with the 2016 Federal Budget policy measures which significantly reshaped the concessionary settings of super, introducing a range of limitations and caps on what amounts, where and when an individual can contribute to super.Footnote1

    This was followed by the 2017 Federal Budget announcements relating to housing measures which allow first-home savers to access their super and enable others who may be downsizing to, in certain circumstances, contribute additional amounts to their super.

    Phase 3

    We are now effectively moving into Phase 3, which is best reflected through the policy and machinery of government changes which have given the ATO the policy and legislative support necessary to continue to be a key service provider, enabler and regulator across the super system.

    The areas expanding the ATO remit include:

    • administrative responsibility for the compassionate release of super
    • continued commitment to the Small Business Superannuation Clearing House
    • the improved enforcement capacity of the ATO to monitor SG payments
    • the imminent introduction of Single Touch Payroll and its key connection to SG reporting and reporting by funds of SG payments.

    We are naturally aware of the recent government announcement about the ‘proactive’ reuniting of super and the proposed amnesty for historical non-payment of SG.

    These matters are still going through the parliamentary and legislative process. Of course, these announcements are on top of initiatives already in place such as consolidating super accounts through myGov and improving SG compliance.Footnote2

    So all this then leads us to where we are now. In the past 12 months, we have seen a range of discussions about the settings within the super system. While no doubt this will continue, what seems to be common ground is the importance of member outcomes.

    Members, of course, are central to any reforms and business or process improvements. Notably, in terms of member expectations, an emerging new feature of our shared future is member engagement. This is essential for all kinds of reasons, as is the need for members’ fund information to be visible to them in a form that assists them to make decisions and monitor their transactions.

    In the case of the ATO, the most evident change, aside from event-based reporting via the Member Account Transaction Service (MATS) and Member Account Attribute Service (MAAS)Footnote3 for the purposes of the 2016 budget measures, is the upcoming reporting by super funds of employer SG contributions to a fund member’s account.

    Pleasingly, this change will bring the SG system to life so it can be seen; it will therefore need to be displayed to members in a format they can understand.

    The ATO appreciates that some funds report, or plan to report, this to their members as part of some of their online account information.

    At the same time, the ATO will also seek to find ways to display the record of that payment into an employee’s account, ideally through myGov.

    The ATO will soon begin consultation to discuss the best way to share this information with fund members in a way which recognises the expectation on the ATO as well as on funds.

    In any event, it’s good to report that we have made tangible progress together on event-based reporting, the operationalisation of the 2016 Federal Budget and created with industry many checkpoints to ensure current and future designs are fit for purpose and working.

    Specifically, we have moved to ensure that ATO systems are resilient and stable to manage the increasing volume of data and information.

    This is being supported by progressive testing and bringing on of data from funds, which allows for capacity and processes testing.

    From this we have sought to share lessons learnt through working with industry and other stakeholders. Some of these have included:

    • on-boarding work and preparation
    • capacity and sequence of transmission messages
    • general protocols.

    From this and from other perspectives you will hear today, you can and should be confident that we can all move to the full implementation of event-based reporting and the other reforms that lie ahead.

    I think today will also assure you that the key foundational work has been planned for and tested.

    We look forward to keeping our lines of communication open in the interest of our genuine and shared commitment to engage and achieve our common goals.

    Thank you for your participation and I encourage you to share and discuss your ideas.

    Footnote 1

    Transfer balance cap (TBC) reports:

    • As at 30 April 2018, the ATO has created 1.26M TBC reports (including 5,144 SMSFs that have reported for 8,700 members).
    • Between 3 January and 30 April 2018, the ATO issued 2,600 Excess Transfer Balance (ETB) determinations to individuals who had exceeded their TBC.
    • In April 2018, the ATO subsequently issued 1,800 ETB tax assessments to individuals who had exceeded their cap and rectified the excess.
    • In the week beginning Monday 30 April we started issuing commutation authorities to funds where the individual had not rectified the excess after being sent an ETB determination. We issued approximately 550 commutation authorities to funds that week.
    • The ATO estimates 7,800 individuals are receiving a defined benefit income stream with a reported value in excess of $1.6M.

    Return to footnote 1 referrer

    Footnote 2

    myGov statistics:

    • As at 31 March 2018, 12.7M adults had a myGov account.
    • As at 21 May 2018, approximately 6.6M myGov account holders have linked to the ATO member service.
    • ATO online services started in 2014, with individuals being able to consolidate their super accounts using this service.
    • There have been about 11.81M super searches using the ATO online service since 2013–14. The breakdown by year is as follows:
      • 2013–14: 549,030 searches
      • 2014–15: 1.84M searches
      • 2015–16: 2.63M searches
      • 2016–17: 2.96M searches
      • 2017–18: 3.83M searches by 3.52M clients.
    • From 2013 to April 2018, 2.1M accounts were consolidated to the value of $10.72B.

    Return to footnote 2 referrer

    Footnote 3

    The services are the Member Account Attribute Service (MAAS) and the Member Account Transaction Service (MATS). These will replace the annual MCS lodgment by funds each October.

     

    Return to footnote 3 referrer

    Last modified: 25 Jul 2018QC 56318