Welcome to the latest issue of the KHQ Super Alert. This week reforms were announced by Treasury in relation to the retirement phase of superannuation, ASIC wrote to trustees in relation to uplifting death benefits claims handling and various Parliamentary Committees released their recommendations in relation to current Bills before Parliament dealing with cyber security, privacy and anti-money laundering.
Treasury – Reforms proposed in relation to superannuation in retirement
On 20 November 2024, Treasury released a fact sheet in relation to the ‘package of reforms’ that the Government is proposing in relation to the retirement phase in superannuation. As referred to in our Super Alert of 8 December 2023, Treasury released a discussion paper last year seeking views from the public ‘on how the superannuation system can best provide the security and income Australians need as they live longer and healthier lives in retirement’. This package of reforms has arisen out of the feedback that was received.
In an associated media release by the Hon Dr Jim Chalmers MP, Treasurer, and the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, it was announced that the reforms will focus on the following ‘outcomes’:
- ‘Enhanced independent guidance’ by expanding and refreshing ‘resources on the [ASIC] Moneysmart website’;
- ‘Better retirement products’ by ‘improving the innovative income stream regulations… giving members more options that meet their needs’;
- ‘Best practice principles’ by introducing a ‘new set of voluntary best practice principles [that] will guide the superannuation industry in designing modern, high‑quality income products that support Australians’ financial security in retirement’; and
- ‘Increased transparency’ with the adoption of a ‘new Retirement Reporting Framework’ commencing from 2027 and enabling ‘monitoring of the outcomes delivered to members in retirement in a consistent and transparent way’.
The release also confirmed that ‘[t]he Government has also tasked APRA and ASIC with undertaking a Pulse Check report by the end of 2025, to monitor trustees’ progress in implementing their strategies under the Retirement Income Covenant’ and that ‘[f]urther consultation with the industry and broader community on the details of these changes will begin in the first half of 2025’.
Click here and here for details.
ASIC – Speech by ASIC Commissioner Simone Constant
On 20 November 2024, ASIC published a speech delivered by one of its Commissioners, Simone Constant. Ms Constant stated that:
- ‘Ensuring accountability of superannuation trustees will be a significant focus for [ASIC] over the next year’;
- ASIC has ‘written to the CEOs of every APRA-regulated superannuation trustee, urging industry leaders to act now to improve their oversight of death benefits’ (see the news item further below in relation to this); and
- ASIC has ‘reminded senior executives that they will become accountable persons under the Financial Accountability Regime from next March, which will be an important step in helping us ensure there is top-down accountability in superannuation funds’.
Click here for details.
APRA – Speech in relation to scrutiny on the superannuation industry
On 20 November 2024, APRA published a speech delivered by its Executive Director of Life and Private Health Insurance and Superannuation, Carmen Beverley-Smith. Ms Beverley-Smith stated that ‘the superannuation industry is under intense scrutiny’ and that ‘APRA’s priorities for superannuation…aim to address gaps and weaknesses across superannuation funds’ operations, risk management frameworks and compliance with the best financial interests duty to members’.
Ms Beverley-Smith also discussed APRA’s main commitments:
- ‘building financial and operational resilience across all our regulated entities’;
- ‘trustees’ approach to investment governance and how trustees are meeting the updated requirements that came into effect in January last year’; and
- ‘where [fund] expenditure is reviewed, [trustees] can expect that [APRA] will seek information from [trustees] that demonstrates the expense was made in the best financial interests of [fund] members, and that [trustees] are continuing to monitor that the expenditure is delivering benefits for members…[using the] necessary metrics to assess the outcomes for members’.
Click here for details.
ATO – Speech on the introduction of Payday Super
On 20 November 2024, the ATO published a speech delivered by one of its Deputy Commissioners, Emma Rosenzweig. Ms Rosenzweig stated that’ the core obligation under Payday Super is that employers will only have 7 calendar days after payday to make sure that a contribution is received by a fund’ and clarified that ‘[t]he changes that Payday Super will require from super funds include’:
- ‘Only having 3 business days to return payments to an employer that you cannot allocate to a member’s account’.
- ‘SuperStream contribution error messaging will be improved to help employers understand why a contribution could not be allocated’.
- ‘SuperStream will also be updated to support faster payments through the new payment platform…’.
Ms Rosenzweig also advised that ‘[e]mployers are ultimately the ones who bear the obligation to make the right super payments to funds on time, and they will have much to do to get ready for Payday Super as well’.
Click here for details.
Legislation – Instrument in relation to taxation of permanent incapacity benefits registered
On 20 November 2024, the Income Tax (Transitional Provisions) (Permanent Incapacity Benefits) Amendment Rules 2024 (Cth) were registered on the Federal Register of Legislation. As referred to in our Super Alert of 9 February 2024, transitional arrangements were in place for the previous two financial years in relation to ‘certain recipients of permanent incapacity benefits who had previously had their superannuation benefits assessed on the basis that they were a superannuation lump sum, and this assessment was first made before’ the Federal Court’s decision in Commissioner of Taxation v Douglas [2020] FCAFC 220.
The latest instrument extends those transitional arrangements for a further 12 months as trustees have advised that they require further time to transition to the new law.
Click here for details.
ASIC – Improvements sought to death benefit claims handling
On 19 November 2024, ASIC wrote to the CEOs of all trustees, ‘urging them to assess their death benefit claims handling practices and address any identified deficiencies’. The letter explains that ASIC has ‘observed operational failures by trustees to gather and analyse data that provides insights into the outcomes experienced by claimants’ and clarified that ‘[w]hile this letter focuses on death benefit claims handling, many of the insights are equally applicable to the governance of other member services provided by trustees’.
ASIC’s ‘initial observations’ include the following:
- ‘Trustees must collect claims handling data that is accurate and fit for purpose’;
- ‘Boards need regular and complete reporting of meaningful performance metrics’; and
- ‘Trustees should have consumer-focused performance objectives for handling death benefit claims’.
Further to the initial observations, ‘ASIC will be issuing a public report in early 2025, with detailed insights from the completed review’.
Click here for details.
Parliament – Recommendations in relation to the cyber security legislative package
On 18 November 2024, the Parliamentary Joint Committee on Intelligence and Security released its report in relation to the Security of Critical Infrastructure and Other Legislation Amendment (Enhanced Response and Prevention) Bill 2024 (Cth), Intelligence Services and Other Legislation Amendment (Cyber Security) Bill 2024 (Cth) and Cyber Security Bill 2024 (Cth).
As referred to in our Super Alert of 11 October 2024, these Bills are part of a package of reforms which propose to introduce ‘a mandatory reporting obligation for entities who are affected by a cyber security incident, receive a ransomware demand and elect to make a payment or give benefits in connection with that cyber security incident’.
The Committee has made 12 substantive recommendations and, subject to implementation of the recommendations, considers that the Bills should be passed by Parliament.
Click here for details.
Parliament – Recommendations in relation to the Privacy and Other Legislation Amendment Bill 2024 (Cth)
On 14 November 2024, the Senate Legal and Constitutional Affairs Legislation Committee released its report in relation to the Privacy and Other Legislation Amendment Bill 2024 (Cth). As referred to in our Super Alert of 20 September 2024, this Bill proposes to make various changes to the Privacy Act 1988 (Cth) such as increasing civil penalties and introducing a statutory tort for serious invasions of privacy. The Committee has made 9 substantive recommendations and, subject to implementation of the recommendations, considers that the Bill should be passed by Parliament.
Click here for details.
Treasury – Consultation in relation to disclosure of listed company ownership
On 14 November 2024, Treasury launched its consultation on the proposed amendments to the Corporations Act 2001 (Cth) to:
- ‘increase the disclosure of ownership information for listed companies’; and
- ‘broaden the Australian Securities and Investment Commission’s regulatory enforcement powers’.
The consultation period closes on 13 December 2024.
Click here for details.
Parliament – Recommendations in relation to the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth)
On 13 November 2024, the Senate Legal and Constitutional Affairs Legislation Committee released its report in relation to the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth). The Bill proposes various amendments to the AML/CTF Act such as changes to:
- ‘reframe and clarify the AML/CTF program and customer due diligence obligations’;
- ‘enable the Australian Transaction Reports and Analysis Centre to require the disclosure of information and conduct examinations’ and
- ‘update the AML/CTF regime to reflect changing business structures, technologies and illicit financing methodologies’.
The Committee has made 7 substantive recommendations and, subject to implementation of the recommendations, considers that the Bill should be passed by Parliament.
Click here for details.
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