Welcome to the latest issue of the KHQ Super Alert. Parliament has resumed again and several Bills have been introduced this week. The key Bill sets out the ‘Your Future, Your Super’ package of reforms. Another Bill proposes to further extend the temporary measures in relation to the electronic execution of documents by companies.
Federal Register of Legislation – Hayne Royal Commission regulations made
On 18 February 2021, the Financial Sector Reform (Hayne Royal Commission Response) (2021 Measures No. 1) Regulations 2021 were registered on the Federal Register of Legislation. One of the main changes made by the regulations is to amend ‘the Corporations Regulations 2001 to make handling an insurance claim a ‘financial service’ under the Corporations Act 2001’.
Click here for details.
ATO – SuperMatch compliance reminder
On 18 February 2021, the ATO issued a reminder to trustees that they are required ‘to provide an annual statement of compliance’ with the ‘new terms and conditions of use for SuperMatch’ by 28 February 2021. The statement must address a number of matters set out in the link below, and will need to be made by the ‘trustee or an appropriately senior and qualified officer of the fund, for example a Chief Risk Officer’.
Click here for details.
Parliament – Your Future, Your Super Bill
On 17 February 2021, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 (Bill) was introduced into the House of Representatives. The ‘Your Future, Your Super’ package of reforms were announced as part of the Federal Budget last year and the Bill is the outcome of the public consultations on the exposure draft legislation conducted by the Treasury late last year (see our Super Alert of 27 November 2020).
The amendments made by the Bill are proposed to commence from 1 July 2021. According to the Explanatory Memorandum, the Bill:
- Single default account: ‘amends the [SG Administration Act] to limit the creation of multiple superannuation accounts for employees who do not choose a superannuation fund when they start a new job’;
- Addressing underperformance in superannuation: ‘amends the SIS Act to require APRA to conduct an annual performance test for MySuper products and other products to be specified in regulations (such as ‘trustee-directed products’ where the trustee has control over the design and implementation of the investment strategy)…Where a product has failed the performance test in two consecutive years, the trustee is prohibited from accepting new beneficiaries into that product’;
- Best financial interests duty: amends the SIS Act to:
- ‘require each trustee of a registrable superannuation entity…to perform the trustee’s duties and exercise the trustee’s powers in the best financial interests of the beneficiaries’;
- ‘allow regulations to be made that prescribe additional requirements on trustees and directors of trustee companies of registrable superannuation entities where failure to comply with these additional requirements would be a contravention of the best financial interests duty’;
- ‘allow regulations to be made to specify that certain payments made by trustees of registrable superannuation entities are prohibited, or prohibited unless certain conditions are met’;
- ‘reverse the evidential burden of proof for the best financial interests duty so that the onus is on the trustee of a registrable superannuation entity’ (importantly the reverse onus does not apply to proof for the duty in relation to trustee directors, as was proposed in the draft Bill released by Treasury); and
- ‘allow contraventions of record-keeping obligations specified in regulations to be subject to a strict liability offence to provide regulators with an additional option to respond to compliance issues relating to record-keeping requirements’.
In an associated media release, the Treasurer advised that the ‘measures will reduce waste in the system and save Australian workers $17.9 billion over 10 years by holding underperforming funds to account and strengthening protections around the retirement savings of millions of Australians’.
Click here and here for details.
Parliament – Electronic execution of documents
On 17 February 2021, the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (Bill) was introduced to the House of Representatives. According to the Explanatory Memorandum, the Bill ‘allows companies to execute documents, hold meetings, provide notices relating to meetings and keep minutes using electronic means or other alternative technologies until [15] September 2021’ (amongst other things). This extends the temporary relief that is due to expire on 31 March 2021 as referred to in our Super Alert of 7 August 2020.
In an associated media release, the Treasurer advised that the ‘Government will finalise permanent changes to allow electronically signing and sending documents prior to the expiry of these temporary arrangements on 15 September’. Draft legislation was released by the Treasury late last year which proposed to implement this change (see our Super Alert of 26 October 2020).
Click here and here for details.
APRA – Deputy Chair’s speech
On 12 February 2021, APRA publish a speech delivered by Deputy Chair Helen Rowell. In the speech titled “Greater Expectations: increasing scrutiny of a maturing superannuation industry”, Mrs Rowell outlined APRA’s priorities and areas of focus for 2021.
Ms Rowell made the following comments:
- ‘[w]ith growth and maturity comes an expectation – indeed a requirement – of a commensurate level of capability and professionalism for those running what are clearly significant financial services businesses’;
- ‘APRA will continue to highlight those funds that are not operating at the expected level…for those in the industry still lagging behind that, if you’re not up to scratch, you need to get better or get out’; and
- ‘[f]or those trustees that have products that are persistently underperforming in any of these areas, they will experience intensified supervisory activity including the expectation the trustee has a plan to rapidly improve outcomes for members or close the product’.
Click here for details.
