- AIST Policy News - 24 September 2018
AIST Policy News - 24 September 2018
Super reform proposals to accommodate future work scenarios
The Select Committee on the Future of Work and Workers has tabled its report for the development of a long-term plan to prepare Australian workers, business and the economy for coming technological change. Three of the report’s 24 recommendations focused on superannuation.
The report recommends legislative changes to ensure that workers who are not classified as ‘employees’ are not frozen out of super system.
The report specifically mentions re-defining gig workers for the purpose of providing full access to protection under Australia's industrial relations system.
The report also recommends reforming parts of superannuation so that superannuation is able to accommodate new forms of work and employment as they evolve.
Recommendation 8: The committee recommends that the Australian Government ensure legislated workplace health and safety and improved superannuation rights for workers who are not classified as employees and/or perform non-standard work.
Recommendation 10: The committee recommends that the Australian Government make legislative amendments that broaden the definition of employee to capture gig workers and ensure that they have full access to protection under Australia's industrial relations system.
Recommendation 24: The committee recommends that the government reform Australia's superannuation system to ensure it remains strong in light of emerging labour market trends, with specific reference to gender equity and workers engaged in non-standard employment arrangements. Specific elements of this reform should include abolishing the $450 minimum threshold for Superannuation Guarantee Contribution eligibility.
The full report can be found here.
ASIC reviews super trustees on insurance
The Australian Securities and Investments Commission (ASIC) has released a report on the provision of insurance cover through superannuation.
ASIC reviewed 47 superannuation trustees for the Insurance in Superannuation Report, with a focus on claims and complaints handling, disclosures, insurer rebates paid to trustees and whether members were defaulted into categories that resulted in higher premiums.
Outgoing ASIC deputy Chair, Peter Kell said that despite many improvements being made by trustees, there were still issues in the industry.
Concerns highlighted in the report include:
- Poor complaints-handling timeframes and practices, as almost a third of trustees in the review took more than 90 days on average to resolve complaints about insurance in 2017-2018
- Some trustees were still automatically defaulting members as ‘smokers’ when transferring them to different sections of the same fund, resulting in higher insurance premiums payable by those members. All trustees have agreed to discontinue this practice.
The report has been released alongside the Royal Commission hearings looking into misconduct in the insurance sector.
Government passes bill to enhance ASIC’s capabilities
The Morrison Government has taken steps to assist the Australian Securities and Investments Commission (ASIC) with the passing of a Bill that will provide it with greater operational flexibility.
The Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Bill was successfully passed through Parliament to give ASIC the ability to engage staff under the Public Service Act 1999, allowing ASIC to be able to compete more effectively for suitable staff.
The amendment brings ASIC into line with APRA and RBA staff recruiting arrangements.
The Government said the Bill will also ensure ASIC considers the effects that the performance of its functions will have on competition in the financial system.
Funds urged to act on ASIC’s industry funding model
The deadline is approaching for organisations regulated by ASIC to meet their legal obligations under new industry funding laws.
ASIC sent a letter in July to each registered office address. This letter advised how to provide industry funding contact details and submit business activity metrics in the new ASIC Regulatory Portal by 27 September 2018.
ASIC Commissioner Cathie Armour said that entities that have the letter from ASIC should act now and follow the simple steps outlined to complete the process.
Entities that do not have their letter should refer to ASIC’s website at www.asic.gov.au to find out what they need to do by 27 September.
Bill for product design/ASIC intervention powers heads to Senate
The Bill for new reforms on product design and ASIC’s product intervention powers has now been referred to a Senate Committee following a second reading in Parliament.
The Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 is aimed at ensuring that financial products are targeted and sold to the right consumers. Where products are inappropriately targeted or sold, ASIC will be empowered to intervene in the distribution of the product to prevent harm to consumers.
The Bill will require issuers of financial products to identify target markets for their products, having regard to the features of products and consumers in those markets. Issuers will also be required to select appropriate distribution channels; and periodically review arrangements to ensure they continue to be appropriate.
In addition, distributors of financial products will need to put in place reasonable controls to ensure products are distributed in accordance with the identified target markets. Where firms are not operating appropriately, ASIC will have the power to intervene. Specifically, ASIC will be able to use the product intervention power to intervene in relation to a product where it perceives a risk of significant consumer detriment.
In considering whether a product, one of its features or a practice tied to its distribution, is causing or is likely to cause harm to a consumer, ASIC will be able to consider a wide range of factors. This will provide ASIC with the flexibility to use the power to address detriment that is relatively straight-forward or in circumstances where the detriment being suffered by consumers is unique.
ASIC will be required to consult with affected parties prior to making an intervention. Parliament will have the opportunity to scrutinise market-wide and permanent interventions - otherwise ASIC's orders will be limited to 18 months in duration.
The Senate Economics Legislation Committee is due to deliver a report on the Bill by November 9, 2018. To provide feedback, please contact AIST’s Senior Policy Advisor Karen Volpato at email@example.com
Alarming cost of early retirement to super balances: VicUni
Research commissioned by Victoria University has found that people retiring early due to ill-health are losing up to $142,100 in superannuation. The flow on effects also have big repercussions for Australia’s economy.
The report states that the economic impact of ill-health resulting in early retirement is estimated to be $45.3 billion of Australia’s GDP, and is expected to rise to $53.4 billion by 2025. In total, this impacts the superannuation sector by $20.8 billion.
The report found that common health conditions associated with early retirement include psychological/psychiatric illnesses – most notably, depression and anxiety, and musculoskeletal and connective tissue conditions including osteoarthritis, osteoporosis, neck and back problems.
Read the full report here.
The findings support research by AIST and ACFS highlighting the major economic and social impacts of non-voluntary early retirement.
The 2014 report found that those working in community and personal services, lower-level administration, sales and as laborers are up to 50% more likely to retire before the age of 60 than professional workers.
Successful start to Single Touch Payroll: ATO
The Australian Tax Office has reported that single touch payroll (STP) has successfully launched with around 40,000 employers now sending their tax and superannuation information from their payroll software every pay cycle.
The ATO’s Assistant Commissioner, John Shepherd, stated that over 2.5 million employees can now see their tax and super information being updated after every pay via myGov.
“This gives them a better picture of their super entitlements and more control over their retirement savings” Mr Shepherd said.
Around 73,000 employers with 20 or more employees are expected to transition to STP reporting this financial year. Additionally, 15,000 small employers with 19 or fewer employees have also voluntarily started their STP reporting.
AIST has advocated for STP over the course of its inception to ensure that the ATO receives regular and accurate information on superannuation guarantee obligations from all employers.
AIST Governance Code Reporting Guidance and reporting dates
AIST member funds participating in the Code reporting pilot must report by 1 October 2018. Reports can be lodged via email to firstname.lastname@example.org
To assist funds in completing their reports, AIST and the Governance Code Monitoring Panel have released an Evaluation Framework.
The Evaluation Framework sets out the reporting expectations for AIST member funds against the Governance Code and in reviewing reports, the Governance Code Monitoring Panel will be guided by the Framework.
To download a copy of the framework please visit the Governance Code page of our website.
Australian Financial Complaints Authority liaison group meeting
AIST will meet with the Australian Financial Complaints Authority (AFCA) on October 3rd to discuss mutual issues of concern and to gain a better understanding of AFCA’s approach to complaints.
We expect to discuss AFCA’s Rules and Operational Guidelines, transitional superannuation guidelines and how AFCA will identify systemic issues. This is an opportunity to seek clarification on outstanding issues.
If you have any questions, or if there are any matters you would like clarified, please contact email@example.com by COB Tuesday 2 October 2018.
APRA responds to growing risk of cloud computing services
The Australian Prudential Regulation Authority (APRA) has today released an updated information paper 'Outsourcing involving cloud computing services' on the use of shared computing services by APRA-regulated entities.
The paper updates a 2015 APRA publication, which outlined prudential considerations and key principles that should be considered when adopting use of cloud computing services.
The update is a response to APRA’s observation of the growing usage of cloud computing services by APRA-regulated entities, an increasing appetite for higher inherent risk activities, as well as areas of weakness identified as part of supervisory activities.
Copies of the publication are available on APRA’s website.
AIST acknowledges Peter Kell’s valuable contribution
In response to the recent news of the impending departure of ASIC Deputy Chair, Peter Kell, AIST thanks Peter for his service and acknowledges his valuable contribution to consumer protection in superannuation and other areas of financial services.
AIST CEO Eva Scheerlinck said Peter was a strong defender of consumer rights who was able to work constructively with industry stakeholders to deliver meaningful reforms.
“We particularly valued Peter’s approach to stakeholder engagement and his agreement to review the RG97 framework,” Ms Scheerlinck said.
The Treasurer last week announced that Mr Kell has resigned with effect from 6 December 2018, prior to the end of his current appointment.