Superannuation Industry Stewardship Group key messages 5 March 2025

Superannuation regulators

Treasury

Treasury updated the group on the following items of interest including Payday Super, member service standards and retirement income streams.

The group discussed confidentiality within consultation processes, how a cross-section of industry is selected for targeted consultation, and implications of an impending federal election on current policy development.

Australian Financial Complaints Authority

The Australian Financial Complaints Authority (AFCA) provided the following updates:

• From 1 July 2024 to 31 January 2025, superannuation complaints trended 30% lower than this time last year.
• The proportion of complaints relating to a delay in super fund complaint handling is currently 17%, showing significant improvement from previous results.

AFCA noted an emerging issue where trustees fail to retain member documentation such as member welcome letters or records of members opting in or out of insurance. The reasons cited for this behaviour include successor fund transfers or records only being held for a certain length of time. In the absence of legislation governing this, AFCA is asking for industry to lift standards on this matter, as the onus is on trustees to understand their members' entitlements.

Australian Prudential Regulation Authority

The Australian Prudential Regulation Authority (APRA) gave an overview of their discussion paper, which includes 8 consultation proposals to strengthen the prudential governance framework for banks, insurers and super trustees. Consultation on this paper opened on 6 March 2025, with submissions due 6 June 2025.

APRA continues its focus on expenditure by funds as outlined in its letter to industry of October 2024, with 2024 fund-level expenditure data released in January 2025. This data is being scrutinised for any expenditure that might not appear to be in the best financial interest of members.

Australian Securities and Investments Commission

The Australian Securities and Investments Commission (ASIC) updated the group on recent key priorities including:

• an ASIC issued a letter to super trustees urging them to strengthen their scam preparedness
• a discussion paper on Australia's evolving capital markets that is open for consideration. Super fund trustees are an important market participant and should consider providing feedback by the due date of 28 April 2025.
• ASIC continues to focus on member services, with work in progress on death benefit claims.

Australian Taxation Office

SMSF illegal early access estimate

In February 2025, the Australian Taxation Office (ATO) released the self-managed super fund (SMSF) illegal early access estimate for 2021–22. This allows the ATO to measure the size, scale, and trajectory of the risk of super being illegally withdrawn by trustees. It is estimated that:

• $250.1 million of super was illegally withdrawn by trustees of SMSFs
• $231.7 million was inappropriately accessed through prohibited loans.

Members noted the results of the 2022–23 illegal early estimate access in 2026 will indicate if current messaging is cutting through to the market. The current cost of living crisis may have an impact on results.

For more information see Latest estimate and trends for SMSF illegal early access.

Payday Super

The group discussed Payday Super consultation, noting that any consultation on items linked to the policy will need to stop once the federal election is announced. Consultation will continue for some limited items that are not linked to legislation.

A communication and transition approach is being developed for the decommissioning of the Small Business Super Clearing House (SBSCH) on 1 July 2026. Users of the SBSCH will need to transition to a commercial alternative for making super payments before 1 July 2026.

Environmental scan – industry members

Industry representatives provided updates and discussed emerging priorities and issues for their market, including:

• priorities for the upcoming federal election
• consideration for naming products in the retirement phase in a more customer friendly manner
• a request for consideration of the low-income super tax offset to be indexed
• the benefits of including proof of age cards into myGov as digital identification for older Australians, who may not, or no longer hold a driver's license
• the importance of mandatory customer service standards, with an observation that super fund websites offer very basic services for culturally and linguistically diverse clients.

Fraud and security update

ASIC wrote to super fund trustees on 30 January 2025 about the prevention of fraud and scams. There have also been talks with trustees about existing measures for responding to scams. Key points included:

• difficulties determining if someone is under the influence of a scammer, although some activities such as a lump sum withdrawal can be used as a prompt to investigate further
• the need for trustees to factor in the scam risk across all their member services, with a reminder that if you are not looking for scam activity you will not find it
• the importance of having security protocols in place for all methods of account interaction, to avoid scam actors exploiting a weakness in the system
• not underestimating the importance of good data and accurate reporting in helping detect potential scamming activities.
• regular communications with members can have a cumulative effect, if members are regularly warned of potential scam activity, it is more likely they will be able to detect a possible scam
• banks are traditionally better at detecting and preventing scam activity, the stronger bank defences get, fraudsters will look for other opportunities to exploit, including super.

Member discussion noted:

• APRA reminded members of the letter issued to trustees in May 2023 recommending the use of multi-factor authentication in member services.
• Industry noted the challenge in member services of balancing the speed of transactions whilst allowing sufficient time for security checks. There is investigation underway to how real time data can be leveraged, as well as improved identification processes arising from facial recognition technology.
• Both the Association of Superannuation Funds and Financial Services Council noted the standards developed for their members, outlining the minimum standard of fraud control and scam mitigation measures that should be deployed.
• The Council of the Aging (COTA) suggested targeted communications for older consumers to help reiterate the risk of fraud and scams.

Systemic impacts of ‘big super’

The Connexus Institute gave an overview of the research paper Systemic impacts of 'big super', which was released in January 2025. The paper investigates the impacts of the large and growing superannuation industry for the Australian economy, financial markets, and population from a wide range of perspectives.

Key takeaways included:

• Australia is much better off with a large superannuation industry than without it. Super has become the second largest form of household wealth behind housing.
• There are some areas of concern arising from the large superannuation industry, including exposure to economic and market risk, and under-developed operational infrastructure.
• Super is an unlikely source of systemic stress, however, could be a dampener or magnifier depending on the situation.

Mandatory member service standards

Treasury provided an update on the government’s announcement to introduce mandatory and enforceable service standards for super, covering:

• the timely and compassionate handling of death benefits
• fair and efficient processing of insurance claims
• clear, respectful and accessible communications with members.

Consultation will occur across the 3 streams. COTA expressed interest in developing communications that provide more value to the member, as there is a conflict between communications in the consumer's interest, versus fund investment interest. Members will discuss this further out of session.

Member communications

ASIC provided the group with interim observations from its recent review of death benefit member resources on super fund websites. ASIC reviewed the websites of 22 super funds, with a mix of retail, industry and public sector funds included.

People making death benefit claims are usually under emotional and/or financial stress, making it especially important that trustees approach these claims in a timely, clear and respectful manner

Findings noted:

• Death benefit information is challenging to find on super fund websites. Sometimes this information is located under insurance or is missing completely.
• Some websites contain basic information about death claims but lack additional details such as how to lodge a claim, or how long a claim can take.
• Content on how to make a binding nomination varies in quality. Some websites provide detailed information on how a binding nomination works, and why it is important. There are also some websites with case studies showing how a divorce, or birth of a child can impact this process.
• Information is sometimes hard to understand. It is important that this information is presented in clear and plain language.
• Support for First Nations clients is poorly communicated, with information only found by using a search function. Very few funds provide details on alternative proof of identification processes for First Nations beneficiaries.
• Not all trustees offer a translation or relay service for claims in languages other than English.

3-tier model in Super and Employer Obligations

The ATO gave an overview of the key concepts of the ATO's 3-tier framework, and how it is applies in managing the ATO's key roles across Super and Employer Obligations.

The framework is a tool that supports a management view of performance and risk to inform priorities for investment. This complements traditional risk management approaches and improves the identification of connections and common themes to better address our key programs of work for super and employment obligations.

Attendees

Guest attendees

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