- AIST Policy News - 24 May 2018
AIST Policy News - 24 May 2018
Amnesty for SG underpayment announced
The Government has introduced legislation into Parliament today which will see a one-off 12 month amnesty for SG underpayment.
The Bill, which also includes previously announced changes to employees with multiple employers, non-arm’s length income and limited recourse borrowing arrangements, is aimed at encouraging employers to come forward and pay unpaid amounts in full.
The measure will set aside penalties on employers for late payment and impose a minimum penalty of 50% on employers who are caught if they do not take advantage of the amnesty period. The measure also allows employers to continue to benefit from tax deductibility for late payments made during the period. The period commences from today.
An SG Amnesty was not one of the recommendations of the Superannuation Guarantee Cross Agency Working Group final report, rather the report suggested the following approach:
“5.9. The Working Group considers that strong sanctions are necessary to deter deliberate non compliance. However, there would be benefits in giving the ATO more flexibility. This would facilitate a differentiated approach that would treat recalcitrant employers more harshly than those employers who accidentally do the wrong thing and come forward to rectify their error”.
Life insurance data released
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have today published new data on group life insurance claims which indicates more than 90 per cent of claims that go to decision are paid in the first instance.
Drilling down on the data – which relates to claims for the period 1 January 2017 to 30 June 2017 - 97 per cent of death claims, 84 per cent for total and permanent disability claims and 87 per cent for trauma claims are paid in the first instance.
In addition to the data being released today, APRA and ASIC released a response paper - Towards a transparent public reporting regime for life insurance claims information - to submissions on the May 2017 Discussion Paper.
Stakeholders are invited to respond to this paper by 5 July.
Copies of the response paper released today, including the consultation items and additional data, are available on the Life Claims Data Collection page.
APRA calls for submissions on its prudential framework review
APRA has this week released the first of a series of consultation papers as part of a wide sweeping review of the superannuation prudential framework.
The consultation papers include: an overarching discussion paper and two short topic papers on governance and risk management.
APRA will release over the next few months short consultation papers covering the other four topic areas addressed in the prudential framework: financial requirements, operational risk and outsourcing; investments; insurance; and member flows and products. It will also be holding roundtable discussions and bilateral meetings with interested stakeholders over the duration of the review.
Submissions on all consultation papers are due by 26 September 2018. A final report on the superannuation post-implementation review is expected to be released by early 2019.
Review of board governance
Today’s release of the papers comes hot on the heels of APRA’s release last week (covered in last week’s edition of AIST policy news) of the findings of a review of board governance.
To recap, APRA has issued a range of recommendations, including that funds should:
- Consider the optimal composition of their boards;
- Consider the extent to which the use of independent experts on committees signals a skills deficiency on the board;
- Have sound board renewal and succession planning processes that strike an appropriate balance between ensuring continuity and bringing in diversity and fresh perspectives; and
- Develop a robust and objective board assessment process that considers the performance of individual directors, as well as the board as a whole.
APRA has urged RSE licensee boards to review their existing governance arrangements against the practices outlined in the letter and address any identified areas for improvement.
AIST is developing a governance toolkit that will provide practical guidance on board assessment frameworks.
The AIST Governance Code and Code Guidance includes commentary on key matters outlined in APRA’s letter including board appointment, diversity, performance, renewal, skills matrix and professional development.
New online form for new employees
The ATO has now finalised the design of the first stage of the online choice of super fund form.
The new Choice of fund form is part of the online new employee commencement process being developed by the ATO within the Single Touch Payroll suite of reforms. The optional process, which will supplement or substitute existing paper form includes the streamlining of the superannuation account nomination process for individuals commencing employment. The first stage of the service will be offered through employers’ business management systems.
The ATO-designed service will be available for use from June, although it requires the design of compliant solutions by software developers that can be used by employers – these are still in early stages of development. The form will display both information about an employee’s existing funds (subject to the passage of legislation currently before parliament) and their default fund.
For further information please contact AIST’s senior policy manager, David Haynes, at email@example.com
Parliamentary Inquiry to examine super fund investment in agriculture
The House Standing Committee on Agriculture and Water Resources has today launched a new inquiry into the barriers to increased investment in Australia’s agriculture sector by super funds.
Commenting on the need for the Inquiry, Committee Chair, Rick Wilson MP, said the Australian agricultural sector was in danger of being left behind because of a lack of investment. “The agricultural sector in Australia needs much more investment if it wants to remain competitive, and the superannuation industry is an obvious source of that. With this inquiry, the committee hopes to find out how investment can be encouraged,” he said.
The Committee will explore:
- Whether there are any regulatory requirements imposed on funds which are acting as a barrier to superannuation fund investment in Australian agriculture;
- Whether the information required by the funds to invest in Australian agriculture is readily available, and if not, what statistical performance reporting of the agricultural sector is necessary; and
- Whether there are any other practical barriers to fund investment in Australian agriculture.
The Committee will be accepting submissions until Friday 22 June.