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Superannuation Industry Stewardship Group key messages 17 November 2021

Information about the key topics discussed at the Superannuation Industry Stewardship Group meeting 17 November 2021.

Last updated 4 January 2022

Superannuation Regulators update


The Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021External Link was introduced into parliament on 27 October 2021 and includes the:

  • removal of the $450 per month threshold for salary or wages expanding coverage of super guarantee to all employees regardless of their pay
  • First home super saver scheme maximum releasable amount
  • reduced eligibility age for downsizer contributions
  • work test reforms for superannuation contributions
  • segregated current pension assets.

The Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021, passed on 21 October:

  • expands the role of the Financial Services and Credit Panel to operate as a single disciplinary body for financial advisers
  • creates new penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act 2001
  • introduces a single registration and disciplinary system for financial advisers who provide tax (financial) advice services.

The Retirement Income Covenant (RIC) consultation is now complete, with legislation for this measure expected to be introduced into Parliament before the end of the parliamentary year.

Members asked about the timeframes for the Quality of Advice Review.

Post meeting – Treasury advised that they are at the information gathering phase of this review. Treasury is happy to receive feedback from stakeholders, however any decision about the review including scope and timing will be decisions for government.

Australian Prudential Regulation Authority

Recognising the heavy burden on industry over the past couple of years and allowing members to have a proper break, the Australian Prudential Regulation Authority (APRA) will be focusing on only the highest priorities over the next few months.

The APRA Connect system is now in place for data collection from entities who submit data to APRA.

APRA will soon issue the 2021 HeatmapsExternal Link – the fourth MySuper Heatmap and the inaugural Choice Product Heatmap.

APRA priorities for discussion/consultation on policy initiatives expected in the coming months include:

Members requested clarity on half yearly audit reporting requirements, given legislation is still with government for a decision but has a potential 31 December 2021 date of effect. APRA responded that this is a matter for government.

Australian Securities and Investment Commission

Australian Securities and Investment Commission's (ASIC) CP 350 Consumer remediationExternal Link consultation paper was released 17 November 2021 with responses due 11 February 2022. The paper discusses updated ASIC draft guidance on consumer remediation conducted by financial services providers.

Consultation Paper 351 Superannuation forecasts: Update to relief and guidanceExternal Link was released this week on proposed updates to relief and guidance for superannuation forecasting tools. ASIC will conduct a briefing session to support the consultation process. Responses are due by 28 January 2022.

Guidance has been issued for employers on Communicating with employees about choice of superannuation fund – What you can and cannot do.

There have been two recent media releases for cases where it was found there had been misleading and deceptive conduct and penalties were imposed:

Australian Financial Complaints Authority

The independent review of the Australian Financial Complaints Authority (AFCA) has been completed and the report is with Senator Hume, Minister for Superannuation, Financial Services and the Digital Economy.

AFCA’s Complaints DataCube is available on their website and funds can see the level of complaints that have been lodged over the last financial year.

AFCA’s annual review shows that superannuation complaints have reduced by 30% for the year. AFCA expect that this is because trustees are working more effectively with members in the early resolution processes. The average time to close complaints was 126 days. Top areas of complaints include:

  • service quality
  • denial of claim
  • claim amounts
  • insurance in super.

Very few complaints were received following the release of the list of underperforming funds.

AFCA member forums are being held online on 18 and 19 November. These forums will cover banking, insurance, investments and advice, and super complaints. Anyone can register to attend.


Single Touch Payroll (STP) Phase 2

ATO is taking a pragmatic approach to support employers to transition to STP Phase 2. The official start date is 1 January 2022 and, while seeing good progress to date, digital service providers (DSPs) and employers who still need more time can apply for a deferral.

STP gives a much more granular level of data and supports the social welfare system, prefiling and streamlining claims. DSPs are taking on more of a role to supply employers with solutions.

There is plenty of information available on STP Phase 2 on and we will continue to provide support through webinars, web content, fact sheets and working with newly established consultation groups.

Superannuation guarantee tax gap

The Commissioner of Taxation annual report 2020–21 included estimates of the net superannuation guarantee gap for 2018–19 which is 3.8% or $2.45 billion.

When comparing the estimate for 2012–13 and 2018–19, we observe a declining trend in the net gap over the five-year period, falling from 5.6% in 2012–13 to 3.8% in 2018–19.

Industry Super Australia (ISA) noted that their estimate of unpaid super is higher due to the differing methodologies used to calculate the gap.

There has been some recent media attention on collecting unpaid super and this topic will be explored further at a future Superannuation Industry Stewardship Group (SISG) meeting – that is, what we are seeing, what is the right approach/balance that the ATO should take.

The ATO takes the non-compliance with super guarantee obligations seriously and uses a range of strategies and activities to educate, support and monitor employer compliance, noting that most entities that have not paid superannuation are small businesses and a decision to act during a COVID-19 recovery period was a delicate process to balance.

Members were invited to send specific questions or areas of concern to the SISG secretariat so we can shape the information required for the next meeting.

ATO is currently considering the High Court’s decision in favour of Ms Addy in the matter of Addy v Commissioner of Taxation. ATO is working through guidance required including impacts for the Departing Australia superannuation payment (DASP regime).

Self-managed super funds (SMSFs)

The ATO gave a paper, at a recent SMSF technical strategy day, showing an increase in high-risk behaviour trends in the SMSF environment such as illegal early release and investment identification fraud. The SISG secretariat will obtain and circulate a copy of the paper to SISG members.

Director identification

Implementation of director identification number (director ID) commenced. 1 November with 40,000 director IDs being issued in the first week.

We have since issued over 80,000 director IDs which has exceeded ATO forecasts.

The intent of the director ID regime is to help prevent use of false or fraudulent director identifies.

ATO has received significant feedback that the process is simple and easy.

Individuals that are a director of a registered entity under the Corporations Act 2001 before 1 November 2021, will need to apply for a director ID on or before 30 November 2022.

All new directors must apply within 28 days of appointment.

From 5 April 2022 a prospective director must have a director ID before appointment.

Educational material has been developed to help people understand the new requirement and how to apply. Further information is available on the Australian Business Registry Services website.

Your Future, Your Super implementation

The Super stapling service started on 1 November 2021.

The deployment was successful, and the service is working as planned. Minor system bugs have continued to be worked through post-deployment.

No bulk stapled fund requests have been received to date, however as the service is still in its early days, the ATO anticipates that this might increase in the lead up to the Christmas period.

Users accessing the service include high levels of both tax and BAS agents, and employers.

The ATO has observed that some requests submitted appear to be for employees who commenced employment prior to 1 November to whom the stapled fund rules do not apply. Anecdotally, we have heard some requests have been made as ‘tests’. We will continue to monitor to ensure there is no confusion around the application of the new rules.

Approximately one third of requests have no established employer/employee link and require a Tax File Number Declaration to be submitted or an STP payee event before receiving a response. We will monitor whether employers successfully re-request for these employees at a later time after the link is established.

Over half of the requests successfully received stapled fund outcomes; approximately 10-12% of requests were for where no stapled fund exists.

Members requested demographics of those where no stapled funds exists and how many employees had submitted choice of fund forms versus choosing to go with the stapled super process.

ATO confirmed that choice transactions occur between the employee/employer so the ATO has no visibility of this and cannot provide that data. The ATO is establishing demographics and will aim to provide age demographics of the ‘no stapled fund’ result at the next SISG meeting.


APRA is undertaking action to address the 13 super fund products that failed the MySuper Product Performance Test.

APRA noted that:

  • the failed super products impact approximately 1 million members
  • to date less than 68,000 members have been moved out of failed products
  • it is receiving weekly data on member movements in these failed products up to the end of 2021
  • it will provide ATO with quarterly performance data two months after the end of the quarter for the YourSuper Comparison Tool
  • there has been significant interest in the media on trustee announcements.

Trustees of failed products have been contacted by APRA and must provide:

  • a rectification plan outlining the improvements they will undertake to ensure they pass next year’s test and a contingency plan that outlines their plans to transfer their members to a fund that can deliver better outcomes for them
  • weekly data on the movement of members and outflow of funds.

Members queried why the letters sent to notify members of the failed products had little impact. Was it because members were not reading this or not understanding it? ISA had done some reflection on the letters and felt the language, whilst confusing, had still helped approximately 30,000 individuals which is not insignificant. There has been movement and changes in the industry as a result of performance testing, including mergers and changes in investment strategies.

ASIC are considering messaging for payroll providers and will explore issues with trustees.

SMSF SuperStream Rollover v3

All funds have onboarded into the SuperStream Rollovers Version 3. It was noted that:

  • We are seeing some teething issues in APRA to SMSF rollover transactions which then requires manual processing to resolve.
  • Based on feedback received, ATO is planning to hold a workshop with the core design team, APRA and SMSFs to discuss issues on hand and explore what can be done, particularly for those issues where ATO does not have full visibility of the process.

Members noted that:

  • They would like regular feedback on how the process is working.
  • Technical issues are understandable given it is early stage of implementation
  • A small delay is acceptable to ensure funds are going to the right place.
  • Verification of member details triggers a manual process.
  • Validation errors are vague and therefore unable to identify what the issue is.

Members commended ATO on the implementation to date and were keen to understand the extent of fraud and cyber risk occurring. They acknowledged that some clearer messaging would benefit the SMSF industry.

APRA financial contingency and resolution planning framework

APRA is looking to implement contingency and resolution planning reforms for maintaining financial system resilience. The framework sets out obligations for entities to plan for financial stress and, where relevant, support APRA in resolution planning. It will be made up of two standards:

  • financial contingency planning, to restore financial resilience or exit the industry
  • resolution planning.

All entities will be required to have financial contingency plans.

APRA are keen to utilise the upcoming consultation period to engage with industry to determine how to make these principles work.

Key dates:

  • Release of draft package for consultation in late 2021
  • Consultation will remain open until mid-2022 with measures coming into effect in 2024–25.

Members asked how the framework would work where a trustee is insolvent. APRA confirmed that it was about having a plan in place before insolvency and to understand at what point in that deterioration the trustee needed to take action.

Members acknowledged that threats to viability of a trustee did not necessarily translate to a threat to members and were keen to understand what a recovery measure looked like as opposed to a resilience measure.

ATO will liaise with APRA to arrange a further out of session meeting for SISG members to discuss this topic.

Super guarantee clearing house issues

Two members of the BAS Agent Association Group (BASAAG) from the Association of Accounting Technicians and Australian Bookkeepers Association presented issues around the use of clearing houses for the payment of super.

  • There are concerns that employers are being unfairly penalised when there are delays in the processing of super payments by clearing houses.
  • Strict application of Superannuation Guarantee Determination SGD 2005/2 Superannuation guarantee: is a contribution to a complying superannuation fund or a retirement savings account for the benefit of an employee made when the employer makes the contribution to a clearing house (other than an approved clearing house)? and the Superannuation Guarantee (Administration) Act 1992 mean that ‘paid on time’ actually means ‘received on time’ in a member's account. There are many steps involved in paying super guarantee and many things can go wrong in the process, some of which is beyond the control of the employer.

Members noted that:

  • Inadvertent administration mistakes on one transaction in a batch can affect the whole batch being rejected by the clearing house and it is not always possible to identify what the issue is.
  • A transaction can be rejected due to changes in superfund details such as ABN.
  • Risks may be minimised if employers pay monthly so that if issues occur they have time to address these before the end of the quarter.
  • The fund details on the fund validation register are not always updated in time; that is, not meeting the requirement for changes to be done 28 days out so accurate information is in play when they undertake that transaction.
  • This is a contractual issue between employers and the clearing houses.

The ATO noted that these issues have been discussed in other forums and while it is not the regulator of clearing houses, we are able to facilitate further discussions with industry. A working group with interested SISG members and relevant stakeholders will be established to investigate this issue further.

Non-Arm’s length income (NALI)

Members noted:

  • The ATO issued Law Companion Ruling LCR 2021/2 Non-arm's length income - expenditure incurred under a non-arm's length arrangement on 28 July 2021. There have since been calls for the ruling to be narrowed to reflect the law’s original intent. A number of industry groups including The Tax Institute, Chartered Accountants Australia and New Zealand and SMSF Association have urged the government and Treasury to rethink non-arm’s length expenditure.
  • NALI consequences are a significant issue for large and small super funds but not for SMSFs. Income derived by an SMSF as a beneficiary of a discretionary trust is NALI, as are dividends paid to an SMSF by a private company (unless the dividend is consistent with arm's-length dealing).
  • There has been ongoing discussion with ATO and a submission to Treasury and government to change the operation of NALI rules and their disproportionate application and penalties.

Treasury confirmed that they were aware of the concerns and continue to talk to minsters offices but do not have a timeframe as yet.

Global Pension Index Report

The Mercer CFA Institute Global Pension Index Report has been compiled for the last 11 years and compares 43 retirement income systems against benchmarks of adequacy, sustainability and integrity.

The 2021 report shows Australia’s rating has dropped to sixth place.

The more highly rated countries have a slightly higher pension age, more people covered, and have a contribution rate of at least 12%.

With regards to the Gender Pension gap, the Organisation for Economic Co-operation and Development data looks at current retirees not active workers so may be a bit misleading, however co-chair David Knox suggested that Australian didn’t fair too bad.

Review of SISG

As the meeting ran over time, this item was not discussed in detail. Some members had provided feedback on SISG achievements in 2021 and the 2022 forward work plan through the members' survey process conducted prior to the meeting.

Co-chair, Emma Rosenzweig, asked members to send through any additional feedback on gaps in representation and topics of interest for deep dives in 2022. All members will receive correspondence post meeting to confirm member nominations.

Members suggested that Senator the Hon Jane Hume, Minister for Superannuation, Financial Services and the Digital Economy and Minister for Women's Economic Security had attended SISG in the past and that it would be good to periodically invite her to these meetings.

Members were happy for David Knox to be reappointed as SISG co-chair.


Attendees list




Emma Rosenzweig (Co-chair), Superannuation and Employer Obligations


Tracie Crowden, Superannuation and Employer Obligations

Association of Super Funds Australia

Glen McCrea

Australian Financial Complaints Authority

Heather Gray

Australian Prudential Regulation Authority

Suzanne Smith

Australian Securities and Investments Commission

Jane Eccleston

Business Council of Australia

Ben Davies

Chartered Accountants Australia and New Zealand

Tony Negline

COTA Australia

Ian Yates

Financial Services Council

Blake Briggs

Industry Super Australia

Ella Cebon

Law Council of Australia

Michelle Levy

Link Group

Sue Pearce


David Knox (Co-chair)

SMSF Association

John Maroney

Super Consumers Australia

Xavier O’Halloran

The Tax Institute

Phil Broderick


Lynn Kelly

Guest attendees

Guest attendees list




Kylie White, Superannuation and Employer Obligations


Michelle Allen, Superannuation and Employer Obligations

Association of Accounting Technicians

Lielette Calleja

Australian Bookkeepers Association

Kerrie Jarius

Australian Institute of Superannuation Trustees

Melissa Birks

Australian Prudential Regulation Authority

Carolyn Morris

Australian Prudential Regulation Authority

Katie Melville

Australian Prudential Regulation Authority

Katrina Ellis

Australian Securities and Investments Commission

James Champion


Alex Maevsky


Apologies list



Australian Securities and Investments Commission

Rosie Thomas

Australian Institute of Superannuation Trustees

Eva Scheerlinck