Policy & Research Archive

AIST Policy News

Trustee flexibility needed on post-retirement offering: AIST

AIST has cautioned the Government against forcing funds to offer a Comprehensive Income Product for Retirement (CIPR).

In  a submission to the Inquiry into CIPRs, AIST calls for trustees to have the flexibility to assess which retirement products – if any - best suit their members’ needs. 

AIST’s submission recommends that all funds be required to have a retirement incomes framework, rather than it being mandatory for funds to offer a CIPR as was recommended by David Murray’s Financial System Inquiry.

While AIST recognises the need to the take up of retirement income products, we believe trustees need the flexibility to offer a range of options.

AIST envisages a retirement incomes framework that would likely vary from fund to fund and could involve funds offering a single product, such as a CIPR, or a standard account based pension. Another possibility could be a fund offering a strategy involving features from two or more retirement income products. There could also be instances where some funds may prefer not to recommend a particular product or strategy at all because they have assessed it is not in their members’ best interests.

The Inquiry has stated that a CIPR must have an annuity element that provides a guaranteed level of income for life. AIST believes that the relative immaturity of the super system means annuity-style products are unlikely to be appropriate or cost-effective for most members.

AIST notes that CIPRs need careful consideration and that a full scale launch may be some years off. Low take-up rates of annuity-style products could make it difficult for providers to achieve scale in the short to medium term.

Issues to be considered highlighted in our submission include the need for enhanced trustee obligations; exit barriers with annuity-based products; inadequate disclosure about counterparty credit risk/mortality risk/interest rate risk; underwriting risk, and moral hazards in offering a ‘preferred product’. We also note that that the Inquiry’s income projections of CIPR products look optimistic given the required elements around income, flexibility and longevity.

ASIC’s new cost recovery framework finalised

As a result of legislation passed on 15 June 2017, ASIC’s cost recovery framework has now been finalised.

Industry funding will see regulated entities share the costs of ASIC’s regulatory services for their sector.

The framework – outlined in a report on the new arrangements released this week –provides a methodology for how the super industry levy – as well as other industry levies - will be calculated.

The report reveals that the graduated component of the super levy will be based on the adjusted total value of assets as at 30 June.

The charging base is largely unchanged from ASIC’s levy funding model proposal paper issued last year.  For super funds, this means a minimum of $18,000 PLUS the graduated component ($0.05 per $10,000 of FUM greater than $250 million). There is no upper limit.

Additionally, all activities regulated by ASIC will be charged a different component.  For details on what charges may be included in the levy for your fund, the tables below from AIST’s December submission may assist:

(a)    Component applicable to financial advice


Number of members

Funds under management

Authorisation to provide advice

Number of advisers providing a personal advice service

Large fund


$90 billion

Personal and general


Medium fund


$4 billion

Personal and general


Small fund


$0.5 billion

No authorisation




$0.5 billion

General only


(b)   Other components


Large proprietary company

Super trustee minimum

Super trustee variable

Personal advice on Tier 1 products

General advice only

Total indicative levy charged

Levy per member

Large fund








Medium fund








Small fund
















AIST remains disappointed that a Statutory Levy component (which is not cost recoverable under the Government’s own Cost Recovery Guidelines) is now included in the levy. This component includes the cost of enforcement action and ASIC’s financial literacy work.

The first invoices will be issued in January 2019 and will recover costs for regulatory services for the 2017–18 financial year.

Salary sacrifice loophole closed but more work needed on unpaid super

AIST has welcomed the decision by the Government to close a legal loophole that leaves workers short changed on their superannuation.

Closing the loophole will mean unscrupulous employers can no longer reduce their SG contributions for employees making salary sacrifice contributions.  

Estimates are that several thousand employees will benefit from the move which follows the Government’s release late last week of a report by the Superannuation Guarantee Cross-Agency Working Group involving Treasury, the ATO and other government departments

The recommendation to close the salary sacrifice loophole is one of nine recommendations and eight ‘agency actions’ contained in the report which was tabled to the Government about six months ago.  

The Government is still considering the other eight recommendations, which include the extension of Single Touch Payroll to all businesses (including small businesses). Agency actions include the ATO ramping up its monitoring and case work of SG non-compliance.

While noting that measures contained in the report do not go far enough in addressing the unpaid super problem, AIST supports several key recommendations and actions in the report.  This includes the increased focus on SG compliance by the ATO and the recommendation to extend single touch payroll compliance to small businesses.

Single Touch Payroll will provide much greater visibility of employer compliance with their superannuation obligations and this is particularly important in regards to the small business sector where non-compliance is greatest.

However we do not support the recommendations in the report that could see a watering down of the existing penalty regime for employers who do not meet their SG obligations.

We see no justification for reducing penalties for non-compliant employers and note that the Government has indicated it will maintain the existing penalty regime.

Furthermore we remain concerned that further measures – not covered in the cross-agency report - are required to tackle the unpaid super problem – notably the removal of the $450 monthly income threshold for SG payments and requiring employers to pay SG at least monthly if not more frequently.

ATO releases super fund report

The Australian Taxation Office has published its annual large super fund industry report, on fund reporting obligations.

The report summarises outcomes from the 2016 Risk Differentiation Framework (RDF) and tailored diagnostic reports delivered to large APRA funds and some key external administrators. The ATO says fund reporting obligations are being met to a high standard and notes this gives it a strong basis to assume a level of ‘justified trust’ with funds. 

Therefore, the ATO does not see the need for audits or a large program of compliance work. However, it has indicated it may still undertake a small number of information system risk assessments and specific issue reviews with funds that have not met benchmarks over several years or may have systemic issues across multiple reporting obligations. 

Additionally, the ATO has become aware of a number of mergers and successor fund transfers occurring this year and is setting up a special team to provide guidance and support for any fund that requests it.

The tailored diagnostic reports which the ATO issued in late March provided funds a snapshot of how well they are meeting their super reporting obligations.  The results were based on the data lodged by funds and the timeliness of their reporting, which were measured against specific benchmarks. In this third year of the RDF, results show ongoing improvement in fund performance against these measures.

The tailored diagnostic reports are designed to help funds understand their reporting performance and provide a comparison of results against peers.

Earlier this year, the ATO hosted a webinar to help funds understand their diagnostic results. During April it also began meeting with key super fund clients to discuss their results and readiness to implement ongoing reforms including SuperStream, Single Touch Payroll and superannuation legislation changes.

AIST members can read more about the large fund diagnostic report on the ATO’s website.

ATO to meet with industry on new SuperStream initiatives

The ATO will hold an Industry Engagement Forum next month to cover the latest information about new SuperStream initatives.

The super industry is working closely with the ATO to further develop and implement SuperStream. The first four years of the SuperStream program, developed in 2011, was focussed primarily on the superannuation industry transforming business-to-business transactions – that is, fund-to-fund and employer-to-fund transactions.

The second stage, involving government-to-business transactions, is now being deployed and involves the ATO sending rollovers and contributions to funds that align to the SuperStream data standard.

The third and final stage of this program will involve implementing business-to-government reporting, including the redesign of APRA-regulated fund reporting for member contributions, lost members and the transfer of unclaimed accounts into the ATO, reusing the SuperStream asset.

Registration details for the industry forum – to be held on August 29 – will be released shortly. 

In the meantime, funds can read more about contributions testing and readiness on the SuperStream Readiness and Implementation Let's Talk page.

Funds experiencing issues with their system implementation plans or contributions testing schedule should contact the ATO by emailing SuperStreamStandards@ato.gov.au.

The ATO has also advised their systems are continuing to operate following earlier disruptions. Funds should note a recent change to SuperStream FAQ 8 on the APRA website that provides guidance to funds on breach reporting as a consequence of future ATO system disruptions.

See below for further information provided by the ATO on current projects:

Government contributions in the SuperStream standard

In May 2017, the ATO commenced paying government contributions to super funds in accordance with the SuperStream standard, including low income super contributions, superannuation holding accounts, super guarantee and co-contributions.

Business deployment verification is now complete and the ATO has announced it will proceed with full deployment of government contributions in the SuperStream standard. 

With six weeks to go before the 31 August 2017 conformance date, the ATO will be engaging closely with funds to support the timely completion of government SuperStream contributions testing and implementation. Funds who have not implemented business-to-business error response messaging by 31 August are reminded that they must report this to APRA as a breach of their legislative obligations.

SuperStream roadmap

The SuperStream roadmap provides a roadmap of change impacting the super industry unitl the end of 2018.  This includes changes to implement the government’s 2016 Budget policies and to accommodate the introduction of Single Touch Payroll.  This is a live document which will be published periodically.

AIST launches second Reconciliation Action Plan

AIST has launched its second Reconciliation Action Plan (RAP) detailing what AIST will do as an organisation to contribute towards reconciliation with Aboriginal and Torres Strait Islander peoples.

Our 2017–2018 RAP  demonstrates AIST’s commitment to advancing retirement outcomes for all Australians. We believe that we have a responsibility to work towards making positive changes that will improve the superannuation experience for Aboriginal and Torres Strait Islander peoples. AIST believes that developing a RAP is strongly aligned with the profit–to–member ethos and we encourage our member funds to consider developing their own RAP if they have not already done so.

If your fund is thinking about developing a RAP, or you would like to learn more about what AIST is doing in this space, please do not hesitate to contact the Chair of our RAP Working Group, Jake Sims on (03) 8677 3855 or at jsims@aist.asn.au.