Welcome to the latest issue of the KHQ Super Alert. The Senate has tabled its report in relation to the ‘Your Future, Your Super’ Bill (recommending that it be passed) and the exposure draft regulations to support the Bill have also been released by Treasury. APRA has also issued two news items in relation to data reporting by trustees and its work in relation to climate-related risks.
Senate – Your Future, Your Super committee report
On 29 April 2021, the Senate Economics Legislation Committee tabled its report in relation to the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 (Cth). Although the Committee set out a number of recommendations from industry associations and superannuation funds for changes to be made to the Bill, the Committee ultimately recommended that the Bill be passed. The Committee acknowledged that the government should reconsider including administration fees in the performance test and, as explained in the next item, this has now been captured in the proposed regulations.
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Treasury – Your Future, Your Super regulations
On 28 April 2021, Treasury released for public consultation the exposure draft regulations and explanatory statement for the Your Future, Your Super reforms. The regulations propose to:
- set out ‘the methodology for the annual performance test and re-opening test, as well as requirements for notifications to members’;
- ‘prescribe the definition of a ‘stapled fund’, including tie-breaker rules for determining which fund is to be an employee’s stapled fund where they have multiple existing funds’;
- ‘specify the formulas as a basis for ranking products on the YourSuper comparison tool’;
- ‘set out the manner in which the portfolio holdings disclosures are organised’;
- ‘prescribe the information that must be included with the notice of an Annual Members’ Meeting’; and
- ‘strengthen the prohibition on funds offering inducements to employers’.
In an associated media release, the Treasurer announced that administration fees have now been included in the performance test, and Australian unlisted infrastructure and unlisted property is now a specific asset class in the performance test.
The consultation period closes on 25 May 2021.
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APRA – Speech in relation to APRA’s current focuses
On 28 April 2021, APRA published a speech made by its chair, Wayne Byres. The speech covered three main issues being climate-related risks, governance, culture, remuneration and accountability and cyber security risks. The following comments were made:
- ‘the processes, tools and data to measure, monitor and manage climate-related financial risks are still developing. There is a deficit of data on how these risks will unfold, in what areas, and over what timeframe’;
- ‘the second major plank of APRA’s current work program on climate-related financial risks [other than the recent guidance] is our pilot climate vulnerability assessment (CVA)…the CVA will help to measure the potential financial exposure of institutions, the financial system and economy to climate-related risks; and boost understanding of how institutions might adjust their business models in response to different climate scenarios’; and
- ‘[w]ork is now well underway to finalise a process of independent cyber security reviews across all APRA-regulated industries. We are close to completing an initial assessment process with nine pilot entities…this will be followed by a 12 month period where all APRA entities will be asked to conduct independent assessments against CPS 234’.
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ARPA – New FAQs in relation to reporting standards
On 23 April 2021, APRA published 18 frequently asked questions (FAQs) for trustees in relation to common data reporting issues raised by trustees for Phase 1 of the Superannuation Data Transformation. APRA has advised that it will update the FAQs in the lead up to the first submission dated of 30 September 2021.
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