Welcome to the latest issue of the KHQ Super Alert. Amendments were proposed this week to the Your Future, Your Super Bill which is currently before Parliament. APRA has released the latest statistics for the superannuation industry and Treasury is requesting feedback in relation to proposed changes to the calculation of exempt current pension income.
APRA – culture and conduct speech
On 27 May 2021, ASIC published a speech delivered by Ms Suzanne Smith, the Executive Director of APRA’s Superannuation Division, in relation to conduct and culture in superannuation. Ms Smith’s comments included:
- ‘[a] single serious accusation of misconduct can cause immense damage to an organisation’s reputation…[t]hat in itself is a prudential risk. APRA’s chief concern when it comes to misconduct, however, is what it says about an institution’s culture, and whether that culture potentially enables or even encourages damaging behaviour’;
- ‘APRA gets concerned when we see evidence of individuals who avoid taking responsibility for risk in case they are blamed if something goes wrong, where individuals are not held accountable when things do go wrong, where issues drag on with no attempt to identify underlying causes, and where accountabilities for risk are not defined across the entity’; and
- ‘[a] sound risk culture…incentivises trustee boards and senior executives to prioritise what’s right over what’s simply profitable or expedient. In doing so, it helps to deliver better outcomes for superannuation members’.
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AAT – decision in relation to review of AFCA decision
On 26 May 2021, the Administrative Appeals Tribunal (AAT) published its decision in the matter of Tebbie and Decision Maker [2021] AATA 1459. Mr Tebbie was unsuccessful in making a complaint against a financial firm at AFCA, with AFCA finding in favour of the financial firm. He then sought a review of AFCA’s decision in the AAT on the basis that ‘notwithstanding AFCA’s independence in its operations, the government is accountable for its conduct and it is to be implied that AFCA is required to act as would a responsible government or minister in dealing with [financial complaints]’. The AAT rejected the application and ultimately found that it does not have jurisdiction to review decisions made by AFCA because AFCA is not a ‘Minister’ for the purposes of the relevant legislation.
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Parliament – Your Future, Your Super reforms
On 25 May 2021, Parliament published three sets of proposed amendments to the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 which are proposed to be moved by one non-Government member of the House of Representatives and one independent Senator. The amendments variously propose to:
- omit the whole schedule dealing with the best financial interests amendments (which includes the reversal of the burden of proof and the ability for regulations to prohibit certain payments and investments);
- amend the meaning of a ‘stapled fund’;
- extend the commencement date of the stapling requirements to 1 July 2022; and
- extend the commencement date of the performance assessment requirements for some products to 1 July 2023.
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APRA – latest superannuation statistics
On 25 May 2021, APRA released the latest quarterly superannuation statistics which show the key statistics for the industry as at 31 March 2021. According to APRA, total superannuation assets were over $3.1 trillion at that point in time which ‘was a 15.1 per cent increase in the value of total superannuation assets over the 12 months to 31 March 2021 due to strong investment performance’. APRA has advised that both member contributions and benefit payments declined compared to the previous reporting period.
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Treasury – proposed changes to the calculation of exempt current pension income
On 21 May 2021, Treasury released exposure draft legislation and explanatory materials which propose to amend the Income Tax Assessment Act 1997 to:
- [provide] ‘choice for superannuation fund trustees to use their preferred method of calculating [exempt current pension income or] ECPI, where the fund is fully in the retirement phase for part of the income year, but not for the entire income year’; and
- remove a ‘redundant requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI, where the fund is fully in the retirement phase for all of the income year’.
- In an associated media release, Senator Jane Hume announced that these reforms “will reduce costs and simplify reporting for affected superannuation funds”. The consultation period closes on 18 June 2021.
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APRA – Reporting Standards FAQs
On 21 May 2021, APRA released additional frequently asked questions (FAQs) and examples in relation to ‘meeting the Reporting Standards for Phase 1 of the Superannuation Data Transformation’. The first collection of data under the new Reporting Standards is set to commence on 30 September 2021. FAQ numbered 1.2 has been updated, but otherwise it is unclear which questions are new in the list as APRA has not identified which questions were recently added.
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