Welcome to the latest issue of the KHQ Super Alert. This week APRA outlined its proposed actions in relation to combining the investment performance of multiple products for the upcoming performance tests. ASIC has also registered an instrument which provides a minor exemption to the revised breach reporting regime.
APRA – Introduction to new APRA executive board member
On 18 August 2021, APRA published an interview with new executive board member, Margaret Cole. Ms Cole made the following comments about her new role:
- ‘It’s vital that funds are well-governed and intensely focused on financial outcomes for members’;
- ‘[t]here will clearly be further consolidation to make sure the administration of funds is as efficient as possible, and to reduce member fees’; and
- ‘I’d like to see a thriving industry, probably more consolidated, by the end of my term. But the other side of the equation is that we need a vibrant, competitive landscape, so there has to be a balance between consolidation and competition’.
Click here for details.
Parliament – Exemptions registered in relation to breach reporting
On 17 August 2021, the ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2021/716 was registered on the Federal Register of Legislation. It provides an exemption to the breach reporting rules in the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 which come into effect in October 2021.
Non-compliance with the internal dispute resolution rules in RG 271 is a civil penalty provision under the ASIC Corporations, Credit and Superannuation (Internal Dispute Resolution) Instrument 2020/98. A contravention of a civil penalty provision is deemed to be a reportable situation for the purposes of the breach reporting rules. Accordingly, breaches of RG 271 which were ‘largely minor, technical, or inadvertent in nature’ would need to be automatically reported, which would create a large regulatory burden on entities.
This Instrument amends the breach reporting rules to ‘exclude non-compliance with [RG 271] from the categories of situations deemed to be ‘significant’ breaches of core obligations about which licensees are to be required to lodge breach reports’. Instead, material breaches of RG 271 will be captured by the standard significance test.
Click here for details.
Treasury – Draft regulations for portfolio holdings disclosure
On 17 August 2021, Treasury released exposure draft regulations and an explanatory statement in relation to portfolio holdings disclosure by super funds. Although the initial consultation on this topic was part of the Your Future, Your Super consultation, Treasury has further amended the proposed regulations to:
- ‘introduce a requirement that the information should be easily downloadable from the website of the fund in a delimited file format’;
- ‘allow cash and bank bill investments to be aggregated by the relevant institution’;
- ‘sub-divide infrastructure and property into directly held and unitised and require percentage ownership for directly held’;
- ‘remove the requirement to disclose maturity dates and counterparty name for derivatives’; and
- ‘make it clear in the Explanatory Statement that, in addition to the mandatory disclosures, [RSEs] are free to provide supplementary information regarding the portfolio holdings of the RSE’s products in a separate public disclosure’.
The consultation period closes on 31 August 2021.
Click here for details.
APRA – Combining investment performance of multiple products
On 16 August 2021, APRA released an information paper in relation to ‘its approach to administering the annual performance test for superannuation products, with a focus on APRA’s methodology for combining investment performance in the performance test’.
According to the information paper, APRA may combine the investment performance of products where:
- ‘there have been changes to the structure or nature of the product (for example, single strategy to lifecycle) but the product continues under an existing MySuper authorisation’; or
- ‘a product has ceased and members have been transferred into a new product under a new MySuper authorisation’.
APRA’s power to make these determinations ‘aims to address circumstances where trustees have intentionally closed a product and opened a new but similar product in order to bypass the consequences of failing one or more performance tests’.
Click here for details.
ATO – Re-contribution of COVID early release amounts
On 16 August 2021, the ATO issued CRT Alert 009/2021 in relation to the administrative arrangements for COVID-19 early release re-contributions. The guidance sets out the MATS reporting requirements for these re-contributions.
CRT 008/2021 was issued earlier in the week and explains the approved forms which members will need to use.
Click here and here for details.
Parliament – New Bill relating to ECPI calculations and family law proceedings
On 11 August 2021, Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 was introduced to the House of Representatives. According to the Explanatory Memorandum, the Bill proposes to (amongst other things):
- amend the Income Tax Assessment Act 1997 (Cth) ‘to remove the requirement for superannuation trustees to provide an actuarial certificate when calculating exempt current pension income using the proportionate method, where all members of the fund are fully in retirement phase for all of the income year’; and
- amend the Taxation Administration Act 1953 (Cth) and Family Law Act 1975 (Cth) ‘to create a new mechanism for sharing superannuation information for family law proceedings’ between the Federal Circuit and Family Courts of Australia and Western Australia.
A web update was also provided by the ATO in relation to the first item.
Click here and here for details.
Parliament – Bill for miscellaneous changes to Treasury laws
On 11 August 2021, the Treasury Laws Amendment (2021 Measures No. 5) Bill 2021 was introduced to the Senate after being passed by the House of Representatives the day before. According to the Explanatory Memorandum, the Bill proposes to (amongst other things):
- amend the Superannuation (Unclaimed Money and Lost Members) Act 1999 (Cth) to allow the ATO to recover overpaid amounts transferred to active accounts of superannuation members (after giving 28 days’ written notice);
- amend the Income Tax Assessment Act 1997 (Cth) to ‘clarify that a [low balance account] fee refund paid by a trustee to a member’s superannuation account is not a concessional contribution’; and
- amend the SIS Act to add a reference to a ‘restructuring practitioner’ as a disqualified person under section 120 (ie, so the ‘appointment of a restructuring practitioner is an insolvency event…triggers the disqualification of a corporate trustee, custodian or investment manager of a superannuation entity from managing a superannuation entity’).
Click here for details.
AUSTRAC – Proposed amendments to AML/CTF Rules
On 30 July 2021, AUSTRAC released a consultation document which proposes to add chapters 79 and 80 to the AML/CTF rules, as well as amending chapters 21 and 48. According to AUSTRAC, the changes propose (amongst other things) to expand ‘the current exemption [in Chapter 48] for providing salary packaging services to also include payroll and superannuation clearance services’.
Submissions close on 27 August 2021.
Click here for details.
