Super Alert – 27 August 2021

Welcome to the latest issue of the KHQ Super Alert – the fourth week in a row of at least 8 news items (in case you’re wondering why you have a headache)! APRA has released FAQs for the Your Future, Your Super performance test, the results of which will be released next week. Meanwhile ASIC has provided guidance on the significant dealing notifications required for DDO.

KHQ Lawyers - Super Alert

APRA – 2021-25 corporate plan released

On 26 August 2021, APRA published its corporate plan which outlines ‘how it intends to ensure the ongoing strength and resilience of the Australian financial system over the next four years’ (2021 – 25). According to the plan, APRA intends to:

  • continue with its ‘focus on financial strength; cyber risks; governance, risk-culture, remuneration and accountability; and implementing the Government’s Your Future, Your Super reforms’;
  • ‘modernise the prudential architecture to ensure it is effective and accessible, less burdensome for entities, and more adaptable to the rapidly evolving financial sector’;
  • increase its ‘ability to respond to the impact of new financial activities and participants, such as technological innovations and new business models that do not fit traditional regulatory approaches’; and
  • help ‘find solutions to important challenges, such as superannuation retirement income products, insurance accessibility and affordability, and the financial risks of climate change’.

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ASIC – 2021-25 corporate plan

On 26 August 2021, ASIC also published its corporate plan. The ‘four external strategic priorities’ for ASIC are noted to be:

  • ‘promoting economic recovery – including through better and more efficient regulation, facilitating innovation, and targeting regulatory and enforcement action to areas of greatest harm’;
  • ‘reducing risk of harm to consumers exposed to poor product governance and design, and increased investment scam activity in a low-yield environment’;
  • ‘supporting enhanced cyber resilience and cyber security among ASIC’s regulated population, in line with the whole-of-government commitment to mitigating cyber security risks’; and
  • ‘driving industry readiness and compliance with standards set by law reform initiatives (including the Financial Accountability Regime, reforms in superannuation and insurance, breach reporting, and the design and distribution obligations)’.

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APRA – Your Future, Your Super FAQs released

On 25 August 2021, APRA released a set of frequently asked questions in relation to the performance test which is being undertaken as part of the Your Future, Your Super reforms. APRA has explained that the results on the performance test will be published on 31 August (with no exemptions) after all trustees have been notified on 30 August.

APRA has advised that funds which fail the performance test must provide notice to all members of that product as at 30 August. This notification requirement cannot be waived, however APRA will give consideration to deferring the obligation ‘in exceptional circumstances such as a merger’.

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Parliament – Bill introduced in relation to SCT transitional arrangements

On 25 August 2021, the Treasury Laws Amendment (2021 Measures No. 7) Bill 2021 was introduced to the House of Representatives. Amongst other things, the Bill ‘amends the [Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Act 2018] to facilitate the closure and any transitional arrangements associated with AFCA replacing the SCT’. This will be facilitated by ‘the transfer of records and documents from the SCT to ASIC, the remittal of matters on appeal by the Federal Court, and [the introduction of] a rule-making power to allow the Minister to prescribe other matters of a transitional nature’.

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APRA – Release of quarterly superannuation statistics

On 24 August 2021, APRA released the latest quarterly superannuation statistics which show the key statistics for the industry as at 30 June 2021. According to APRA, total superannuation assets were over $3.3 trillion at that point in time which ‘was a 14.7 per cent increase in the value of total superannuation assets for the year ending June 2021 due to strong investment performance and positive contributions growth’. APRA has advised that both lump-sum benefit payments and pension payments decreased during this time.

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ASIC – DDO and significant dealing notification requirements

On 23 August 2021, ASIC released additional guidance to help trustees with the upcoming design and distribution obligations. ASIC has noted that ‘as part of these obligations, issuers must notify ASIC of a significant dealing (except excluded dealings) in a financial product that is not consistent with the product’s target market determination’. Notification must be made ‘within 10 business days after becoming aware of a significant dealing’ and can be sent to the email address noted in the guidance material.

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APRA – Work test and pandemic disaster payments FAQ

On 23 August 2021, 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: ‘Can an RSE licensee accept a personal contribution from an individual who is aged 67 to 74 and in receipt of the Pandemic Leave Disaster Payment or COVID-19 Disaster Payment under the ‘work test’ rules?’
  • Response: ‘APRA’s view is that [trustees] should not assume members in receipt of the Pandemic Leave Disaster Payment or COVID-19 Disaster Payment are automatically ‘gainfully employed’ for the purpose of the ‘work test’ and the acceptance of voluntary superannuation contributions…An individual receiving the Pandemic Leave Disaster Payment would not be able to count the 14 days in which they receive the payment towards the work test due to the fact that the individual must not be working to be eligible for the payment…APRA notes that it is possible that people receiving these payments may return to work in the future and therefore still manage to satisfy the part-time work test’.

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ATO – Section 20C notices to be issued

On 20 August 2021, the ATO issued a news alert advising that it will ‘start issuing Section 20C notices (former temporary resident) for the period 1 January to 30 June 2021, with a due date of 1 November as 31 October is a Sunday’. The ATO has advised trustees that ‘revocation requests should be lodged as soon as possible for notices issued for individuals you think were incorrectly identified as former temporary residents’.

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KHQ Lawyers - Sanela Osmanovic

Sanela Osmanovic Senior Associate

Sanela is a Senior Associate in the superannuation & financial services team, and has a broad range of experience working with a range of superannuation fund trustees, superannuation administrators,... Read More

KHQ Lawyers - Natalie Cambrell

Natalie Cambrell Principal Solicitor

Natalie Cambrell leads our superannuation and financial services team.  With more than 20 years’ experience, she has an enviable reputation for her in-depth knowledge in these highly regulated and... Read More