Welcome to this week’s issue of the KHQ Super Alert. APRA has clarified the interaction of JobKeeper payments and the work test for personal contributions, and provided a reminder to trustees about SPS 515 compliance. ASIC has announced that Victorian-based financial advisers will obtain some small relief from non-compliance with certain obligations.
APRA – work test and JobKeeper FAQ
On 1 October 2020, APRA added an additional question and response on its ‘Frequently Asked Questions – Superannuation trustees’ response to COVID-19’ webpage. A summary of the additional query is set out below:
- Question: ‘Where an individual is aged 67 to 74 and is stood down from their employment due to the impacts of the COVID-19 pandemic but is in receipt of the JobKeeper payment, can an RSE licensee accept a personal contribution from that individual under the ‘work test’ rules?’
- Response: ‘APRA’s view is that where an employer is receiving the JobKeeper wage subsidy for an individual, RSE licensees should consider the individual to be ‘gainfully employed’ for the purpose of the ‘work test,’ even if that individual has been fully stood down and is not actually performing work…RSE licensees need not distinguish between individual members on JobKeeper who are working reduced hours or those who have been stood down, and can assume that all members in receipt of the JobKeeper subsidy satisfy the ‘work test’ for the purpose of voluntary superannuation contributions’.
Click here for details.
APRA – Deputy Chair speech publication
On 30 September 2020, APRA published a speech delivered by its Deputy Chair, Helen Rowell, to a trustees’ forum. Titled ‘Being change ready: imagine the unimaginable’, Ms Rowell made the following comments:
- ‘Undertaking robust business planning and stress testing, designed to ensure you are prepared for significant changes and shocks – including those that might be considered unlikely or even ‘unimaginable’ – is one way to be on a stronger footing to protect members’ best interests no matter what you may encounter. Prudential standard SPS 515 Strategic Planning and Member Outcomes, was designed with exactly that in mind.’
- ‘Ensuring the effective implementation of SPS 515 has only become more critical since the outbreak of COVID-19. The financial and operational challenges created by the pandemic pose additional questions that trustees need to reflect on in fulfilling their SPS 515 requirements, and their legal duty to protect members’ interests.’
- ‘…despite the intense scrutiny the industry is under at present…not every trustee appears to have embraced these requirements with equal gusto. In particular, we are concerned that some trustees are approaching implementation of SPS 515 as a ‘tick-a-box’ compliance exercise, and may not be planning appropriately for the future.’
Click here for details.
ASIC – No action position in relation to Victorian financial advisors
On 24 September 2020, ASIC announced that it will take a no-action position against financial advice businesses in Victoria that ‘may find it difficult to comply with the fee disclosure statement (FDS) and renewal notice obligations’. ASIC announced that in these circumstances, it ‘does not intend to take regulatory action against an Australian financial services (AFS) licensee or their representative for a breach of sections 962G, 962K and 962S of the Corporations Act’. This will only apply to licensees or representatives where their entire business or a substantial part of it is in Victoria.
Click here for details.
Federal Court – Death benefit distribution
On 23 September 2020, the Federal Court of Australia handed down its decision in EEU20 v Meat Industry Employees’ Superannuation Fund Pty Ltd  FCA 1359 which was an appeal from the SCT in relation to a death benefit distribution.
The deceased member had died during a fight with his spouse’s ex-husband. He had married his spouse two weeks before that event. The trustee resolved to pay his death benefit in accordance with his preferred beneficiary nomination, which split his death benefit to his spouse (70%) and the remainder 10% each to his three teenage daughters from a previous marriage. The daughters appealed the decision to the SCT claiming that the spouse should not receive any of the death benefit because she had been involved in the fight and had now been committed to stand trial for the murder of her ex-husband who also died in the fight. The SCT preferred the evidence of the spouse about her financial dependency and accordingly the SCT’s determination was aligned with the trustee’s decision and only slightly varied the percentages to be paid to each beneficiary.
Ultimately, however, the Federal Court set aside the SCT’s determination on the basis that the SCT had denied the daughters procedural fairness. The matter was remitted back to the SCT to redetermine taking into account the Court’s reasons.
Click here to download the full judgement.