Emma Rosenzweig, Deputy Commissioner, Superannuation and Employer Obligations
Speech delivered to the ASFA conference
30 November 2023
(Check against delivery)
Good morning everyone. It’s a pleasure to again be part of this session alongside APRA and ASIC.
While there is always plenty on our agendas, I know most of you are keen to know what’s new in the policy space – so I’m going to start there.
The government’s new Payday Super measure announced earlier this year, is a simple idea that makes a big difference and I’m really excited and passionate about the opportunity it brings to contemporise the SG ecosystem.
While Treasury is leading the policy consultation, we have also been consulting on the administration requirements for the measure, which will inform government about the options available for implementation.
Following high-level co-design workshops held in July with a broad range of stakeholders, including funds, last week we held more in-depth co-design workshops on administrative options with key stakeholder groups. I know many of you have been involved in these discussions, and I’d like to thank you for your continued strong partnership with us to make this measure work.
I encourage you to use this lead time to examine and uplift your governance processes for receiving and processing the increased volume of contributions for Payday Super, which in turn will mean more reporting to the ATO.
The other big announcement made by the Government in the super space, was the Better Targeted Superannuation Concessions measure. With this measure, individuals with a Total Super Balance over $3 million from the end of the 2025–26 financial year and onwards, will be subject to a tax of 15% on earnings attributable to amounts over $3 million.
To minimise the impact on funds and members, we are looking at the most cost effective way to ensure we have the necessary data to administer this calculation, leveraging existing reporting requirements where possible. It is anticipated that there will be fewer likely impacted individuals in APRA regulated funds, than SMSFs.
While both of these new measures largely impact individuals and employers, it is super funds who play an important role in ensuring we can administer the new laws effectively.
Correct reporting to the ATO is critical, as we use that data to administer over 20 ATO products increasingly in real time, such as correctly calculating individuals’ contributions caps, employer superannuation guarantee compliance, and the display of member information on ATO online. So strong governance controls are critical, and expected by the community, including your members.
Previously I’ve talked about expanding the ATO's use of existing data from employer STP reporting and super fund MATS reporting.
With our large investment in our data capability, for the first time we’ll create a view of employees’ SG data provided by all super funds and employers – in one place. A single SG position for each employee. By doing so, we can follow up employer non-compliance more proactively and closer to real time, so we can help employers get back on track. We will also be taking firmer and stronger action in relation to unpaid SG, to influence and change employer behaviours – particularly as we transition to Payday Super. We have already started taking a more proactive approach to non-compliance with super guarantee.
In the 2022–23 year, we issued over 134,000 nudges and reminders to employers who had previously had compliance issues resulting in over $80 million in super guarantee charge liabilities being disclosed voluntarily. In the 2022–23 year, we also collected and distributed nearly $700 million of super entitlements into the super accounts of members. But our latest measurement of the super guarantee gap estimates that $3.6 billion goes unpaid. That is why these initiatives are so important, to improve the voluntary compliance of employers, and support the ATO’s ability to identify and get employers who have a problem back on track quickly.
We are also monitoring trends of incorrect reporting from both employers and funds. For funds, this means over the next 6 to 12 months we will continue to have a focus on working with you to improve the timeliness, completeness, and accuracy of the data reported to and held by the ATO.
Some of your funds may already be engaging with us on member reporting governance, through the Combined Assurance Reviews that our Public Groups area of the ATO lead with the Top 1,000 taxpayers. We want to raise the profile of the importance of good governance and active management of member reporting to the ATO, given how critical it can be for your members. We have examples (and I have shared some of them with you before) of where funds have got it wrong and have had large scale reporting issues - and the work from both the fund and the ATO to remediate the issues, and the impact and consequence for their members has been enormous.
We each have a role to play to ensure we have the right governance and controls in place to make sure we prevent those sorts of scenarios arising, particularly as we head towards Payday Super and even greater real time reliance on the quality of data reported to us. So, I really do encourage you all to be thinking about what you have now and/or what you need to have in place, to be able to provide your Board and us at the ATO assurance that your member reporting is accurate, and when mistakes happen that you have the capability and willingness to respond and remediate issues as soon as possible.
Finally, following on from comments made by Jane and Carmen, I wanted to update you on the fraud and security work that was commissioned by our peak consultative group, the Superannuation Industry Stewardship, Group (SISG), which I have the pleasure of co-chairing with David Knox.
Late last year, the SISG established a Fraud and Security Working Group made up of regulators and industry practitioners and chaired by APRA. The Working Group’s intent was to assess threats across the super system and consider opportunities to address risks and strengthen controls.
It was really pleasing to hear at this month’s SISG meeting about:
- the processes that SISG members have underway to implement pragmatic approaches to strengthening their controls and the system more generally
- increased efforts to better share intel and information across the industry and with regulators, so we can collectively protect members’ retirement savings.
Ensuring individuals receive their entitlements and that they are kept secure, continues to be a very high priority for the ATO.
I will leave my opening remarks there but very happy to take questions.