Welcome and introductions
Emma Rosenzweig, Deputy Commissioner, ATO, opened the meeting with an Acknowledgment of Country. The group welcomed new member Melissa Birks, representing Super Members Council of Australia, and thanked departing member Ella Cebon, representing Industry Super Australia.
Assistant Treasurer and Minister for Financial Services discussion
The Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, discussed the government’s superannuation policy and priorities, and responded to questions.
Superannuation regulators
ATO
Super guarantee annual employer compliance results
The ATO takes non-compliance with super guarantee (SG) obligations seriously. The Super guarantee – annual employer compliance results have been released, highlighting key statistics and analysis for SG employer obligations, including ATO compliance actions undertaken for the 2022–23 financial year.
Super health check
The Super health check, launched in April 2023 and provides 5 basic checks that people can do to become more in control of their super:
- check your contact details
- check your super balance and employer contributions
- check for lost and unclaimed super
- check if you have multiple super accounts and consider consolidating
- check your nominated beneficiary.
The ATO is currently undertaking consultation with select stakeholders to review and refine the super health check.
Updates to ATO website
The ATO website is being updated to a modern website platform. Public Beta has commenced, and users can access the Beta website by clicking the link in the banner at the top of the current landing page of ato.gov.au. The updated ato.gov.au will become the default website later in November.
Australian Prudential Regulation Authority
Australian Prudential Regulation Authority (APRA) confirmed its priorities and discussed the key challenges facing industry in the next 12 months, including:
- system-wide risks, including the investment governance framework standard
- operational resilience, including cyber security
- improving retirement outcomes.
APRA continues to focus on transparency in super with the publication of the annual superannuation performance test and heatmap.
Key policy updates:
- Consultation on the proposed enhancements to Prudential Standard SPS 515 Strategic Planning and Member Outcomes has commenced.
- Financial resilience for risk events will be subject to early stage consultation in late 2023–early 2024. This is linked to the recent amendments to Prudential Standard CPS 230 Operational Risk Management.
Australian Financial Complaints Authority
Australian Financial Complaints Authority (AFCA) noted that complaint volumes for 2023–24 are ahead of the forecast and 2022–23 results from the same time last year. AFCA is engaging additional staff to assist in meeting increased complaint numbers.
Key super complaint statistics show:
- delays in complaint handling represent 1 in 4 super complaints
- service quality issues represent 1 in 3 complaints, including account administration, incorrect application of fees and charges, and other delays
- there are instances of super fund staff not being fully trained or lacking appropriate skills to handle complex issues
- clusters of complaints have been received in relation to administration issues, such as successor fund transfers and changes to IT systems and member portals.
AFCA is constantly monitoring for systemic issues.
Australian Securities and Investments Commission
Australian Security Investments Commission (ASIC) continues to address scam activity. Upcoming work will assess trustees’ preparedness to protect against scams. This is an expansion of work undertaken earlier this year in relation to banks (Report 761 Scam prevention, detection and response by the four major banksExternal Link).
Member services remain a focus. ASIC has commenced a member services review, with a focus on death benefit claims handling.
ASIC recently commenced civil penalty proceedings in the Federal Court alleging Telstra Super failed to comply with its internal dispute resolution obligations.
Other ASIC updates include:
- REP 775 Insights from the reportable situations regime: July 2022 to June 2023External Link has been published, with findings echoing the 2021–22 results.
- The Inventory of superannuation trustee transparency and disclosure obligationsExternal Link (Information Sheet 278) has been updated.
- The results of the choice products distribution review are expected to be published early next year.
Treasury
Treasury provided an update on current activity and consultation:
- The Treasury Laws Amendment (Measures for Consultation) Bill 2023: Non-arm’s Length Expense Rules for Superannuation Funds is expected before Parliament shortly.
- A recent policy announcement regarding amendments to the transfer balance cap will prevent members from being adversely impacted by super fund mergers.
- Consultation on the Sustainable Finance Strategy is open.
Treasury also provided an update on consultations that have closed recently:
- Submissions on Securing Australians’ superannuation are being reviewed and will be provided to government.
- The government intends to introduce the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 to Parliament before the end of the year. The group discussed the treatment of debt and applicable interest under this system, noting treatment would remain consistent with Division 293.
Discussion also noted that any sale of assets to meet a Division 296 liability would see standard application of capital gains tax. The Financial Services Council disapproves of this approach.
- Consultation on the review of the regulatory framework for managed investment schemes has concluded, with findings to be reported to the government in early 2024.
Treasury advised of upcoming consultation on the retirement income phase. Navigating the retirement income system is complex and many members need to combine multiple income sources as they enter retirement. Many will take a cautious approach when entering retirement and not draw down too much on their super. The group discussed decision-making in retirement; considered the impact of aged care costs on super; and noted the need to encourage members to engage with their super.
Environmental scan
Super Consumers Australia
Super Consumers Australia (SCA) is an organisation that advocates, advances, and protects low- and middle-income people in Australia’s superannuation system. SCA’s strategic priorities include:
- improving member outcomes
- making retirement planning easier
- improving insurance in super.
SCA has upcoming research on detangling the drawdown, insurance claims handling review, and super fund expenditure review.
Self-managed superannuation fund Association
The self-managed super fund (SMSF) Association noted the SMSF sector is growing at a steady rate, with a surge of new registrations following COVID-19. The younger demographic is the fastest growing segment for SMSFs.
There are currently over 600,000 SMSFs in Australia, representing under a third of the total assets under management in super.
Illegal Early Release (IER) continues to be a concern. There is a need to ensure people understand the consequences of IER.
Fraud and security
The group discussed how both regulators and industry are continuing to progress the opportunities identified in the Fraud and Security Working Group (FSWG):
- there has been a positive response from industry in considering the outcomes and recommendations arising from the FSWG
- processes are underway to implement pragmatic approaches to strengthen controls across the super system
- improved intelligence and information sharing is occurring across industry and regulators
- concerns were raised about inconsistent approaches across the sector and the speed of progress on some initiatives.
This topic will return to the Superannuation Industry Stewardship Group (SISG) in mid-2024 for an update.
Member services
ASIC provided an update on their member services review. This is an area of growing concern, as highlighted by the Minister for Financial Services.
Member services refers to the range of ways super funds engage with their members, including interactions through contact centres, mobile applications, and written communications. Super funds have an obligation to make services accessible to their members, whilst balancing security concerns.
There is no single big-ticket item that will improve the quality of member services; rather, there are many components that need to be balanced. AFCA has suggested focus areas for trustees to improve member services and reduce the volume of member complaints.
Discussion with industry noted the following:
- The Financial Services Council conducted a survey which found that applying outcomes-focused customer service models, where staff are empowered to quickly escalate issues, has led to improved outcomes for members. For example, having a customer service representative move with a member as the call is transferred from department to department ensures the member is supported until the call is concluded.
- Delayed payment of death benefits and insurance claims continues to be an issue. It was noted that binding death benefit nominations can result in a faster resolution for the member.
- There is a need for member education about binding death benefit nominations, including the provision of clear information about how these nominations work, and the benefit for the member.
- ASFA suggested greater accessibility, customer visibility and understanding of the complaints process, will improve complaints handling. For example, a customer portal enabling a member to log in and see the status of their complaint.
- SCA noted super is a low priority for a lot of people. Expecting members to use customer portals may not work as well as it does in other sectors. Research indicates customer service levels are not a common reason for people to switch funds.
- There are current resource pressures on the labour market, which is making it difficult for funds to source appropriately skilled staff.
ASIC concluded that whilst there are competing priorities for super funds, member services need to remain a key focus.
Data quality for super funds
The ATO is focused on improving member reporting, as this data is fundamental to the operation of the super system. The data reported by super funds is used by over 20 products within the ATO, including to correctly calculate individual contribution caps, for employer SG compliance, and the display of member information in ATO Online. As new policy measures such as Payday Super are implemented, the importance of quality data will become more critical.
To build on work to date and achieve continuous improvement as the member reporting system matures, the ATO will work with the super industry over the next 6–12 months on improving the timeliness, completeness, and accuracy of data reported to and held by the ATO. This work will focus on 2 key outcomes:
- increasing the profile and understanding of importance of quality reporting for member outcomes
- addressing known data quality issues to improve the quality in data holdings.
The ATO will continue to engage with the large fund industry to identify further work required to improve overall data quality.
There is no additional data reporting or new data fields as part of this work. Rather, the focus is on optimising the quality of data that is received and processed.
APRA noted work is underway on an information paper that will detail data governance and data risk management across APRA regulated funds, this will be linked to CPS230.
Mercer CFA Institute Global Pension Index
Mercer summarised highlights from the Mercer CFA Institute Global Pension Index 2023 (the Index).
The Index benchmarks 47 retirement income systems around the world, based on adequacy, sustainability, and integrity. The report this year also included a chapter on Artificial Intelligence and its potential to improve pension and social security systems and provide people a better quality of life in retirement.
Australia rated 5th place with a B+ grade. Only 4 countries received an A grade in 2023, the Netherlands, Iceland, Denmark, and Israel.
There was discussion with group members about what Australia can do to reach an A grade, including:
- introducing a requirement to take a retirement income stream
- requiring benefit projections on annual statements
- requiring unisex annuities
- introducing SG on paid parental leave
- introducing a government super contribution for carers- Council on the Aging Australia noted this should apply for carers of aged persons, not just childcare.
Review of SISG 2023
The group discussed the operation of the SISG including achievements, forward priorities, coverage of membership and meeting processes. Feedback included:
- information provided within the group is useful and is shared with group members’ organisations
- the strategic map is of value and should continue to be provided
- the creation of the Fraud Security Working Group was effective in addressing a known issue- the creation of short-term working groups allows for the exploration of hot issues, for example member services
- presentations on upcoming consultations are helpful to assist with planning
- valuable insights are derived from industry members in the environmental scan and commentary on agenda items
- there is adequate diversity in the group’s members, with potential to consider bringing other organisations for particular topics, for example Australian Transaction Reports and Analysis Centre
- there is adequate opportunity to nominate agenda item suggestions- Emma Rosenzweig stressed the importance of group members' contribution to agenda items
- the combination of online and face-to-face meetings is working well
- confidentiality and risks to the system need to be managed effectively
- group members would like senior leaders to lead presentations on policy discussions
- group members raised that the former National Tax Liaison Group super sub-committee was a good place to discuss technical issues and that closing this has left a gap- Emma Rosenzweig will report back to the group on the status of sub committees.
Emma Rosenzweig advised that the group is due to undertake a membership refresh before the end of the year. The ATO will write to member organisations requesting nominations for appropriate members or to confirm their existing representative.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Emma Rosenzweig (Co-chair), Superannuation and Employer Obligations |
|
ATO |
Larissa Evans, Superannuation and Employer Obligations |
|
Association of Super Funds Australia |
Glen McCrea |
|
Australian Financial Complaints Authority |
Heather Gray |
|
Australian Securities and Investments Commission |
Jane Eccleston |
|
Australian Securities and Investments Commission |
Jessica Spence |
|
Business Council of Australia |
Stephen Kirchner |
|
Council on the Ageing Australia |
Patricia Sparrow |
|
Financial Services Council |
Spiro Premetis |
|
Link Group |
Deborah Schembri |
|
Mercer |
David Knox (Co-chair) |
|
SMSF Association |
Peter Burgess |
|
Super Consumers Australia |
Xavier O’Halloran |
|
Super Members Councill of Australia |
Melissa Birks |
|
The Tax Institute |
Phil Broderick |
Guest Attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Jeremy Hirschhorn, ATO Executive |
|
ATO |
Kylie White, Superannuation and Employer Obligations |
|
ATO |
Malcolm Allen, Superannuation and Employer Obligations |
|
ATO |
Tania Yeowart, Superannuation and Employer Obligations |
|
Australian Prudential Regulatory Authority |
Carmen Beverley-Smith |
|
Australian Prudential Regulatory Authority |
Claire Mitchell |
|
Australian Prudential Regulatory Authority |
Mel Grantham |
|
Australian Prudential Regulatory Authority |
Mike Cornwell |
|
Australian Prudential Regulatory Authority |
Sarah Nicholson |
|
Australian Prudential Regulatory Authority |
Sophia Hohnen |
|
Australian Securities and Investments Commission |
Susan Wieczkiewicz |
|
Chartered Accountants Australia and New Zealand |
Nelunika Anthony |
|
Commonwealth Government |
The Hon Stephen Jones, MP |
|
Treasury |
Adam Hawkins |
|
Treasury |
Brenton Philip |
|
Treasury |
Brian Healey |
|
Treasury |
James Thomson |
|
Treasury |
Roger Hassan |
Apologies
|
Organisation |
Member |
|---|---|
|
ATO |
Peta Lonergan, Superannuation and Employer Obligations |
|
Australian Prudential Regulation Authority |
Carolyn Morris |
|
Australian Prudential Regulation Authority |
Katrina Ellis |
|
Chartered Accountants Australia and New Zealand |
Tony Negline |
|
Law Council of Australia |
Maged Girgis |
|
Law Council of Australia |
Michael Mathieson |
|
Treasury |
Lynn Kelly |