Welcome to an extended issue of the KHQ Super Alert and happy new year! This issue captures the relevant news since the holiday break including APRA’s release of a revised draft of SPS 250 (Insurance in Superannuation) and an announcement from the ATO that the transfer balance cap will be indexed on 1 July 2021.
ATO – Indexation of transfer balance cap
On 27 January 2021, the ATO announced that the general transfer balance cap will be indexed on 1 July 2021 to $1.7million. However, the cap will apply differently to individuals depending on whether they start a retirement phase income stream for the first time on or after 1 July 2021, or whether they already had a transfer balance cap account before 1 July 2021. This indexation may also have flow-on effects for members seeking to make contributions to their account or their spouse’s account.
Click here and here for details.
APRA – Consultation on insurance in superannuation prudential standard
On 20 January 2021, APRA issued a revised draft of prudential standard SPS 250 Insurance in Superannuation for a second round of public consultation. According to APRA, the ‘key changes to the standard address two recommendations from the financial services Royal Commission, and reflect Government recommendations that trustees make it easier for members to opt-out of insurance, and ensure that premiums don’t inappropriately erode members’ retirement income’. APRA ‘intends to finalise [SPS 250 and the accompanying prudential practice guide] by the middle of the year, with the finalised SPS 250 expected to commence from 1 January 2022’.
Submissions to APRA close on 5 March 2021.
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APRA – Engagement with ASIC
On 22 December 2020, APRA issued a media release which provides an update on its engagement with ASIC in 2020. The following were provided as examples of collaboration between the two regulators for the past 12 months:
- ‘Conduct issues can give rise to breaches of legal requirements under the respective remits of both agencies. In two cases … the agencies agreed that ASIC should be the lead regulator to address alleged misconduct. These decisions were designed to avoid significant duplication in the investigative process for each regulator and the institutions, and focus the institutions on a single regulatory response’; and
- ‘APRA and ASIC have worked together to ensure guidance to trustees was integrated, including jointly informing all licensees on 1 April 2020 of current and new obligations prompted by the crisis. The agencies have also collaborated on developing and implementing a single pandemic data collection’.
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Treasury – Consultation paper for modernising business communications
On 18 December 2020, Treasury released a consultation paper in relation to ‘improving the technology neutrality of Treasury portfolio laws’. The purpose of the consultation paper is to:
- ‘identify and categorise the types of business communications that would benefit from technology neutrality changes, including those technology neutrality changes that will lower current compliance costs’;
- ‘develop principles to guide subsequent legislative change’;
- ‘identify legislative change that may be required to give effect to these principles and improve the technology neutrality for each category of communication’;
- ‘address sensitivities and risks associated with technology neutrality’; and
- ‘prioritise reform implementation’.
The consultation period closes on 28 February 2021.
Click here for details.
APRA – Self-assessment against regulator performance framework
On 18 December 2020, APRA released a report in relation to APRA’s self-assessment against the government’s regulator performance framework for the 2019/20 financial year. According to the report, APRA considers that all six key performance indicators were met in 2019/20, however opportunities for improvement were identified in three areas. These related to whether APRA did not ‘unnecessarily impede the efficient operation of regulated entities’, had ‘clear, targeted and effective’ communication, and whether ‘compliance and monitoring approaches are streamlined and coordinated’.
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APRA – New implementation date for APRA Connect
On 18 December 2020, APRA advised that its new data collection solution, APRA Connect, ‘will go live at the end of September 2021’. APRA Connect will replace Direct to APRA as it is ‘a modern, efficient and flexible solution to improve data collections and support evolving regulatory needs’. However, during the transition period, trustees ‘will be required to use both D2A and APRA Connect’.
Click here for details.
Australian Law Reform Commission – Inquiry approach released for financial services regulation review
On 17 December 2020, the Australian Law Reform Commission (ALRC) released its inquiry approach in relation to its review of financial services regulation. As referred to in our Super Alert of 18 September 2020, the ALRC will consider ‘whether, and if so what, changes to the Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth) could be made to simplify and rationalise the law’. According to the inquiry approach document, the ‘key problems that are sought to be addressed by this inquiry’ include:
- ‘[r]egulation is overly complex and unwieldy, making it difficult for regulators, regulated entities, government agencies, courts, and legal practitioners to keep track of the body of regulatory materials’;
- ‘[t]here are a large number of definitions scattered throughout legislation, and many key terms are defined differently within and between related statutes’;
- ‘[d]efinitions are frequently used as a means of ‘switching on and off’ sets of substantive obligations, rather than being used to elucidate meaning…such that it becomes a drawn-out process to identify when particular obligations apply’;
- ‘[d]elegated legislation, including legislative instruments issued by regulators, are frequently used to substantively amend primary legislation, with implications for transparency, navigability, and broader rule of law objectives’;
- ‘[t]he structure and framing of Chapter 7 of the Corporations Act do not provide clear links between the individual provisions and the fundamental norms of behaviour that they seek to pursue, as recommended by the Financial Services Royal Commission’; and
- ‘[a]n overly prescriptive approach to regulation creates risks of regulatory arbitrage (eg the design or provision of products and services to circumvent the requirements), adds to compliance costs, and reduces productivity’.
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Federal Register of Legislation – Miscellaneous regulations registered
On 14 December 2020, the Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2020 were registered on the Federal Register of Legislation. According to the Explanatory Statement, the regulations:
- amend the SIS Regulations to ‘ensure that permanent residents of New Zealand are eligible for early release of their superannuation on compassionate grounds relating to the coronavirus…in accordance with the same policy settings that apply for Australian citizens, permanent residents of Australia and New Zealand citizens’. This amendment applies retrospectively from 25 March 2020;
- make consequential amendments to the Corporations Regulations as a result of the amendments made by the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020; and
- amend the SG Regulations to delete a redundant provision and clarify how excluded salary or wages operate, as a result of amendments made to the SG Act by the Treasury Laws Amendment (2020 Measures No. 6) Act 2020.
Click here for details.
