Welcome and opening remarks
Melanie Casey opened the meeting with an acknowledgment to country, welcomed those in attendance and introduced the new members. Ian Roberts, Ley Caldwell, Cindy Tjahja, Jarred Brown and Amanda Gunn were noted as apologies.
There were no objections to the meeting being recorded to support the writing of key messages. The audio recording will be deleted once the key messages are endorsed by the co-chairs.
Melanie gave an update from 7 June out-of-session meeting on Transfer Balance Account Reporting. If funds have concerns, they are encouraged to contact the ATO.
Current change drivers
Sue Pearce noted that there are no significant changes to the Superannuation Changes Industry roadmap that is attached to the agenda.
Discussion centred around what is in the future for industry:
- Focus will be on the 2022 budget impacts.
- Super guarantee (SG) payment increase and what it means, need to keep watching brief, will it increase client tax returns?
- Downsizer shift to age 55 will increase the volume of applications significantly. This will interrupt workflow and may cause double-ups in contributions depending on how it is reported.
- Australian Prudential Regulation Authority (APRA) super data transformation phase II and phase III. Industry is trying to get APRA to go slow, and merge II and III to reduce associated costs.
Superannuation Administration Group (SAG) reviewed the Roadmap covering January to December 2022 and noted other regulators, APRA and Australian Securities and Investments Commission (ASIC) also have considerable change agendas. Significant changes driven by other regulators include:
- ASIC internal dispute resolution (IDR) – the changes coming through for large funds in February 2023, the remainder in August 2023.This is about IDR and reporting to ASIC – complaints data reporting should be there, but now it is reporting this data through to ASIC.
- Consumer Data Rights – waiting to see where super comes into this. Trustees and administrators need to see what this means for them. No time frame at present.
- Retirement Income Covenant 2 – industry currently building products around this, a key issue for industry.
- Non-arm’s length expense provision, finance accountability regime and the Douglas case.
- Expansion of minimum draw down rates. This would become a business as usual piece eventually.
- There are many fund mergers happening now industry wide. All of industry are dealing with normal business as usual work, regulatory changes and significant successor fund transfers (SFTSs). There are no signs of SFTs slowing down looking into the future.
- Shane Moore advised that the ATO is currently reviewing the SFT protocol with a holistic view and aim to avoid undue risk and impacts for industry. ATO will share the draft with SAG when completed.
- APRA has SFT frequently asked questions that need to be more contemporary and up to date. Funds are being challenged with new scenarios all the time and the feeling is there seems to be no guidance on how to report these instances. There are downstream impacts and there is no guidance from a regulator perspective. This may well be an APRA issue, but it would be good to align some ATO guidance with industry.
Update on changes impacting funds
Sonia Corsini provided an update on:
- Announced but unenacted measures under the previous government that include
- legacy pension measure
- residency changes for SMSFs
- first home super saver technical changes
- military super changes relevant to the Douglas decision, among others.
- These announcements and or bills in Parliament have now lapsed and it is up to the new government whether they will proceed with them.
- ATO will share information on the progress of these measures with funds as soon as we are able to.
Some announcements that were part of the election campaign including downsizer age threshold change dropping further to 55. There has been some discussion in the media about change moving from 60 to 55 from 1 July 2022, which at this stage is incorrect.
- Funds will need to remain vigilant with members and advisors potentially confused on the relevant age threshold that applies on 1 July 2022 (being 60).
- The ATO does not have visibility of fund processes but some additional vigilance regarding money coming in from 1 July will be important. We need to be aware of the downstream implications of this, with some people potentially going into excess where funds do not automatically reject contributions that do not meet the age threshold. We don’t know the timing of the 55 age threshold change at present.
- Any information from funds that could be provided to the ATO on the impacts of a further threshold change including need to update hard coded systems, letters, would be useful to the ATO to assist us in implementing any further change.
If there are any questions or concerns (including any unintended consequences), either email Sonia Corsini directly or the FSE Governance mailboxThis link opens in a new window.
Your Future, Your Super and Super Choice form review
Tracie Crowden provided an update on the Your Future, Your Super (YFYS) project that included:
- ATO has developed 2 new form concepts that have been issued for user testing. The previous form was 6 pages long with a lot of technical terminology and acronyms which have now been removed.
- We have simplified the language and used a more conversational tone in the 2 new forms. We have also used tips to help the employee understand the information needed, where to get it and how to use it. We have also reduced the fund contact information and used more icons to help the employee be more engaged.
- User testing is underway, and participants have noted that the concepts are easier to complete. The reader usability rate for the old form was 3.2/5 and the new ones are rated at 4.8/5. A remarkable improvement.
- A final concept will issue to a small stakeholder group (not widely shared) and then we will take steps to publish the new form, which will be issued most likely post July 2022. As soon as we have a set date, we will pass that on to industry.
Fund engagement updates
Shane Moore noted:
- SuperMatch – questionnaire issued in April to funds using SuperMatch to understand their monitoring of new accounts opened via online channels, watch lists and how they respond.
- We received responses from all funds, which have now been reviewed. We will provide a summary response to funds in the coming weeks and re-convene the industry working group for further discussion in late July.
- SFT protocol – currently reviewing published guidance to make sure that it is fit for purpose. This is a large piece of work and will be happening over the next few months. ATO will be working with Gateway Network Governance Body about some of the Binding Implementation Practice notes in the gateway network to rationalise relevant guidance. As we work through this process, funds will be involved in the conversation regarding impacts.
- Currently there is an out-of-date user guide for the member account attribute service (MAAS) and member account transaction service (MATS) portal. We are looking at updating this content now as these forms sit within online services for business.
Bill Korras gave an update about Super Enquiry Service (SES) that included:
- There has been an increase in manual SMSF verification service (SVS) verification requests – this should only be used when stakeholders cannot access the actual SVS service. Some requests have been received when the fund has received an outcome already using the SVS, and then resubmit manual requests through the SES or CRT mailbox to verify the outcome request.
- There have been 350 queries through the SES over the last 30 days. If members have any concerns, please reach out directly to Bill Korras or add comments to enquiries.
Anna Pace gave an update on campaign work that included:
- Unlinked MATS report – lowest levels we have seen which is great. Need to keep member experience in mind.
- We are engaging with a few funds regarding their unmatched MATS and or MAAS, especially where there is MATS attached with high numbers, mostly deceased accounts.
- Since January we are working on release authorities that are over 10 days old. It is important that we get on top of those that are related to first home super saver.
- Unclaimed monies – reporting each category is required, even if the reporting is a non-lodgment advice.
- Annual balances – we have been cleaning up by checking accounts open by 30 June, some accounts did not need to be open or should have been closed, so this house keeping has been beneficial.
- Reminder to members – 30 June annual balances are coming up and due soon.
- Focus for next quarter – we are looking at work items particularly suspended payments. Funds should double check that
- payment reference number on the payment message has been quoted in the associated reporting
- payments are made to the correct bank account
- all mandatory fields have been completed.
- ATO takes a risk based approach for identifying campaign work undertaken.
- Funds can obtain a listing of their unlinked transactions by sending a request through the SES.
Rollovers version 3
Tracie Crowden provided the following update:
- SVS response rates for May were 65% and for June 67%.
- We are noticing that funds are again putting in multiple requests for one individual without changing information. Unless data changes, nothing will change with the response. Our team will continue to work with particular funds so that we can rectify this.
- A decision tree is being created to work through SMSF member rollovers. A working forum has been set up and is progressing well. The intent is for information sharing and issues management and bringing the right people together around the table to discuss.
- Members noted that the forum is a great initiative. It includes the right stakeholders and having the providers there, helps the forum to guide and navigate.
- A question was asked if there is any guidance material or an Alert going to be published about when the SMSF paper process finishes.
- Tracie advised that the process was due to finish at end of financial year but has been extended until 30 September 2022.
Forward work program and priorities
Sue Pearce noted:
- The forward work program aims to note issues or glitches in the system that are ongoing. Sue is keen for all members of the SAG to have their voice regarding the program and priorities, what needs to be picked up and actioned, and areas of high importance.
- COVID-19 was a factor for all industry participants, what have SAG learned and taken away as key issues? Members were asked for any high level comments
- Departing Australia Superannuation Payment is still a key issue
- Financial hardship process – not administered by ATO, but trustees verify through Centrelink. A question was whether there is an opportunity to go to Treasury to change the financial hardship provisions and revamp the compassionate release, hardship measures.
- This would be a big change involving legislative review and liaising with government.
- Closed account remediation – we are 4 years into MAAS/MATS reporting. There is more learning to be done. Open and close is still causing industry and ATO significant issues. ATO are putting in system changes, however Sue was not sure where this is in the schedule of work.
- Alastair Ramsay responded by advising that the ATO is still working on the complexities around this, and it is particularly challenging as there is no simple fix (issues impact across several ATO products).
- There is no definitive solution at present, with only stop-gap processes in place, which is not ideal. The idea of a possible workshop was raised, with Sue confirming this is a workshop issue and not a SAG meeting topic.
- Rollovers version 3 – a SMSF, APRA, ATO forum has been set up and is a good group who are looking at operational changes, insights, and guidance around procedures. It is currently a work in progress and will be a special purpose forum only.
- SuperStream failed fund validations – discussion that all are not suspended payments, some are fund issues.
- Some technical receipts received from ATO where fund does not have the unclaimed superannuation money. ATO received the message but don't process it, as such the fund does not know there is any error. This whole scenario causes a lot of issues and is very time consuming. What can industry do to assist the ATO with this?
- A suggestion was more guidance around concrete solutions and processes. Shane Moore advised the ATO is looking at payment suspension issues and patterns, as there are several causes of this. A broader instructional piece could be put together for guidance.
- Notice of intent process with personal super deductions – numerically there are currently thousands of these. It is still a paper driven process, and as such a very long process.
- A question was posed to SAG – Is there anything with this process that could make it more contemporary with the high volumes being received? Is there any workshop that the ATO could set up to try and lessen the manual process? Looking forward is this another piece that the SAG could be looking at?
- Melanie Casey advised the ATO Individuals’ area are doing a communication process for notice of intent each year. We have started an automatic matching process recently looking at where a deduction has been claimed at D12, but we don’t have the corresponding MATS notice of intent notification and reversing those deductions. Sue suggested an out of session SAG if required to discuss the issue further.
March APRA fund client experience survey findings
Tracy Holloway noted:
- 76 responses were received, which is not as many as in previous years.
- 95% of respondents are satisfied with the value that they derive from consultation groups.
- 90% agree that ATO participation at industry conferences, or tax advisor briefings were important.
- The ATO website is the main information source that is used, closely followed by CRT Alerts.
- noting the searchability of the website needs improvement, which we are working on now.
- Industry would like ATO to engage early and ahead of changes, and information about prospective changes be made in a timely manner. Transparency on inbound inquiry channels and responsiveness could also be improved.
- Participation and feedback are valued by the ATO and feedback was sought from members regarding the optimum release time of the survey to ensure greater participation.
- Sue advised that November is generally a slower month for industry and suggested this may be a better time for delivery of the next survey.
Superannuation Industry Stewardship Group
Melanie Casey raised key points from the last Superannuation Industry Stewardship Group meeting.
ASIC raised breach reporting and additional reporting they require.
APRA advised work to administer 2022 performance test is well advanced. Have been engaging with trustee products and following-up with trustees where responses to engagement have not been sufficient.
- Retirement income covenant joint letter with ASIC advising all registerable licensees are required to formulate retirement income strategy by 1 July 2022.
- Planning to issue a letter in June regarding the prudential standard SPS310 audit. Issue final standard SPS530 investment governance as soon as possible and working on feedback request for guidance.
Australian Financial Complaints Authority advised a large number of super complaints going to them without going to trustee first.
- 33% of those complaints could be dealt with by the trustee. 10 to 11% are going all the way through to the adjudicator or Ombudsman. Majority of the decisions are in favour of the trustee.
- Top 5 issues tend to be super related. Total and permanent disability, income protection, death benefits and pensions.
ATO advised parties with family law matters can approach the Federal Court and the Family Court of Australia now to obtain information regarding super interest from the ATO.
Australian National Audit Office released a report addressing SG non-compliance at end of April 2022. This report supports the adoption of prevention and more proactive approach to improve SG compliance.
Australia Post are now on-board to be a SMSF message provider to enable the Rollovers version 3 SuperStream data standard which is good news.
A round table with Commissioner of Taxation was recently held. The ATO very much values consultation with industry. Issues raised included non-arm's length income and non-responses to private binding ruling requests.
Other business and close
Co-chair Sue Pearce is leaving Link Group and going to another industry participant. Sue has been in the forum for 15 years. Sue commented the ATO does an amazing job and thanked the ATO for all their work.
Melanie Casey thanked Sue for all her work, and outstanding job representing industry as advocate and strong voice. Expressions of interest for a new co-chair are presently being looked at.
Regarding CRT Alert, Shane Moore confirmed we are tracking as an internal issue and will endeavour to provide an update as soon as possible.
A question was raised as to whether the SAG would reconvene face-to-face meetings. Melanie advised occasional face-to-face industry forums are valuable, and we are looking to get back to ‘normal’, possibly in the latter half of the year.
Shane Moore noted about the Fund Validation Service (FVS) that we have reached out to the industry technical group and we are considering their feedback. However there is no delivery schedule at present, and no update since the presentation at the December 2021 meeting. 35,000 amended MCS were received last year, with no current plans to phase out due to ongoing volumes still being received.
Co-chairs Melanie Casey and Sue Pearce thanked members for their attendance and contributions.Key topics discussed at the Superannuation Administration Group meeting 22 June 2022.