Super Alert 8 July 2022: review of Your Future, Your Super reforms; APRA paper re CPS511; ASIC guide re superannuation calculators

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Posted By and on 8/07/22 at 12:08 PM

Welcome to the latest issue of the KHQ Super Alert. This week the Government announced a review into the Your Future, Your Super reforms, APRA released a consultation paper in relation to further amendments to CPS 511 (Remuneration) and ASIC issued a new regulatory guide in relation to superannuation calculators.

Government – Your Future, Your Super reforms review

On 7 July 2022, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, announced that the Federal Government has asked Treasury ‘to review the operation of the Your Future, Your Super laws (YFYS laws) after the second round of MySuper performance tests have taken place by August this year’. This review has been requested due to ‘concerns that the YFYS laws have the potential to create [perverse or unintended] outcomes [for members] by discouraging certain investment decisions or certain infrastructure investments’ and ‘concerns relating to the regulatory complexity of the best financial interests duty’. The government has announced that it will pause the extension of the performance test for 12 months (ie, the test will continue to only apply to MySuper products).

Click here for details.

APRA – Amendments to CPS 511

On 6 July 2022, APRA commenced public consultation in relation to ‘proposed new remuneration disclosure and reporting requirements’ for APRA-regulated entities. It is proposed that these requirements will be contained in Prudential Standard CPS 511 Remuneration. According to APRA, its key proposals are that:

  • ‘APRA-regulated institutions will be required to publicly disclose information on how their remuneration arrangements are designed, and how risk is factored into remuneration outcomes for key executives. This will ensure transparency on how executives are rewarded and incentivised, and on consequences where risk is managed poorly’;
  • ‘APRA will publish centralised statistics to provide greater comparability of remuneration outcomes across APRA-regulated entities, supported by reporting requirements that are proportionate to their size and complexity’; and
  • ‘the proposed remuneration disclosure and reporting requirements will take effect after the implementation of CPS 511 in 2023 for large entities and 2024 for smaller entities’.

The consultation period closes on 7 October 2022.

Click here for details.

ASIC – New regulatory guide in relation to superannuation calculators

On 5 July 2022, ASIC released new Regulatory Guide 276 ‘Superannuation forecasts: Calculators and retirement estimates’ which supports the new legislative instrument released last week in relation to the provision of superannuation calculators and retirement estimates (as referred to in our Super Alert of 1 July 2022). According to ASIC, RG 276 ‘explains what providers need to do to rely on [the] relief in ASIC Corporations (Superannuation Calculators and Retirement Estimates) Instrument 2022/603’ and gives ‘greater clarity to trustees about how they can use calculators and retirement estimates as part of their strategies under the retirement income covenant, which came into effect on 1 July 2022’.

Click here for details.

Government – 30th anniversary of compulsory superannuation

On 1 July 2022, the Treasurer, the Hon Dr Jim Chalmers MP, issued a media release in relation to the 30th anniversary of the compulsory superannuation system. Dr Chalmers explained that since the superannuation guarantee was enacted on 1 July 1992, ‘superannuation has grown from around $148 billion to over $3.4 trillion held by around 16 million Australians’ and has ‘helped millions of Australians enjoy a secure and dignified retirement’. For example, an ‘eighteen-year-old who started working in 1992 will on average have around $182,000 in superannuation’.

Click here for details.

ASIC – Review into MySuper performance test communications

On 24 June 2022, ASIC released its Report 729 ‘Review of trustee communications about the MySuper performance test’ which sets out its findings from a ‘review of superannuation trustees’ communications with their members following the first annual performance test for MySuper products’. ASIC reviewed communications issued in relation to 12 MySuper products which failed the annual performance test and found that ‘the communication strategies of some trustees may have risked confusing or misleading members about their product’s performance’.

ASIC has noted that its ‘strategies of concern’ include:

  • ‘publishing the MySuper product’s failure of the test on a webpage less likely to be visited by persons interested in the product’;
  • ‘highlighting other performance measures that were more favourable, such as recent positive past performance figures’; or
  • ‘criticising aspects of the test to suggest it was not relevant to the particular product’.

Click here for details.

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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 Director

Natalie leads our Superannuation & Financial Services team. With more than 25 years’ experience, she has an enviable reputation for her in-depth knowledge in these highly regulated and complex... Read More