- AIST Policy News - 3 May 2017
AIST Policy News
Industrial framework critical to default fund selection
AIST has highlighted the importance of an industrially-based default system in its response to the second stage of the Productivity Commission’s review of default fund selection.
In its submission to the Commission’s report on alternate default models ; AIST argues that an industrial-based legislative framework is critical to balancing the interests of employees and employers in relation to default fund selection.
AIST notes that top performing retirement income systems around the world are industrially-based and that Australian employer and employee associations have a long history of working efficiently and cooperatively in the default fund selection process.
Other key recommendations in AIST’s submission include:
- Australia’s super system is recognised as one of the best in the world and the consistent outperformance of the existing default fund system has been a major contributor to this success;
- Robust consumer protections are a vital factor in any default fund selection process;
- AIST strongly supports Commission proposals for a quality filter, a multi-criteria selection process, and an independent body in the selection process. AIST notes that these elements are key elements of the existing Fair Work Commission process;
- Net returns are a critical factor in determining whether an adequate retirement income will be provided;
- Insurance must remain a core element of default funds;
- Concentration of default funds to a very small pool carries risk;
- SuperStream and Single Touch Payroll will play a key role in reducing account proliferation;
- Greater transparency and enhanced regulation on disclosure is needed to compare default funds and also protect members who may move.
AIST is appearing at a Productivity Commission hearing in Sydney next week. You can view AIST’s submission here.
Members seeking further information on AIST’s submission can contact AIST Policy & Regulatory Analyst, Richard Webb at firstname.lastname@example.org.
Recommendations on unpaid super will improve retirement outcomes: AIST
AIST has welcomed all 32 recommendations in a report on unpaid super released by the Senate Economics References Committee this week.
In a media release issued today, AIST CEO Eva Scheerlinck said AIST supported all of the 32 recommendations made in the Senate Economics References Committee report,Superbad – Wage theft and non-compliance of unpaid Superannuation Guarantee, and called on the Government to prioritise their implementation.
Key recommendations in the report include:
- Amending the SGA Act to remove the $450 monthly threshold on SG eligibility and the loophole that allows voluntary contributions to count towards an employer’s SG obligation;
- Ensuring superannuation funds have the appropriate arrears process in place;
- Reviewing and prioritising ATO resourcing for compliance activities;
- Requiring SG to be paid at least monthly;
- Reviewing the definition of Ordinary Time Earnings for the purpose of SG calculations;
- Extending Single Touch Payroll to all businesses;
- Amending the Fair Work Regulations to ensure that payslips reflect earnings base for SG, all voluntary contributions due, compulsory SG due and all amounts actually paid.
Whistleblowers need to be better protected: AIST
AIST has called for much stronger protections for those who blow the whistle in its recent appearance before the Joint Parliamentary Committee on Corporations and Financial Services Inquiry into whisteblower protection.
AIST believes whistleblowers play an important role in helping companies detect and address corporate wrongdoing. This contributes to the ability of corporate Australia – in which super funds invest - to be ethical, responsible and sustainable for the long term.
AIST also noted that a robust whistleblower framework is important for super funds as large employers and stewards of financial capital.
The Inquiry is examining the adequacy of the current Australian whistleblowing framework and whether reform is necessary. It is due to report by 30 June 2017.
Members seeking further information can contact AIST Research Officer, Jake Sims at email@example.com
Insurance in super – member input sought
AIST is calling on members to provide input into two reviews released by the Insurance in Super Working Group (ISWG).
Against a background of heightened government and regulator focus on the current insurance arrangements in superannuation, AIST and other industry groups have been actively working on a number of projects to improve insurance offerings. Since October last year, two reviews from the Insurance in Super Working Group have been released for super funds and other industry stakeholders to provide feedback.
The ongoing work of the ISWG is focused on:
- Reducing account balance erosion through multiple accounts and high premiums
- The need for better data standards and for funds to be in control of all of their insurance data
- Providing better assistance to members during the claims process
- Improving member communications about their insurance cover and claims
- The development of a Code of Conduct and industry standards
- Research into the costs and benefits of group insurance
Member feedback on reviews should be directed to AIST Regulatory & Policy Analyst, Richard Webb at firstname.lastname@example.org
RG97 - critical items remaining
AIST continues to strongly advocate for comparability and transparency in fee and cost disclosure.
AIST are involved in an industry-wide working group, which will use the AIST manual on RG97 as a basis for guidance. The following issues remain unresolved but are critical to ensuring both transparency and a disclosure level playing field:
- There is a different RG97 disclosure regime between superannuation funds and managed investment schemes (MISs). This difference means that superannuation funds would look more expensive than MISs.
- There is substantial confusion surrounding what is a ‘transaction and operational cost’. Additionally, what costs are included is different between superannuation funds and MISs, to the competitive advantage of MISs.
- Different treatment of fees and costs between asset classes. In many cases, it appears that the costs included in the Indirect Cost Ratio (ICR) depends on what the issuer identifies as an ‘interposed vehicle’. This provides an unfair cost disclosure advantage to certain styles of investments, eg. listed property as compared with direct property investments.
While we continue to advocate for improved comparability and transparency, AIST needs the assistance of funds in responding to recommendations that will soon be released by the working group.
If you think you can assist, please contact AIST Senior Policy Analyst, Karen Volpato at email@example.com
Financial Counsellor Register now available
AIST member funds can now access Financial Counselling Australia’s online register, allowing them to confirm the credentials of financial counsellors that are acting on behalf of fund members.
Superannuation funds must identify the person that they’re dealing with before they discuss details about a members’ superannuation interests. The online register – developed by Financial Counselling Australia in conjunction with the financial services sector – is designed to make this identification process easier for super funds when members choose to nominate a third party, such as a financial counsellor, to act on their behalf.
The online register allows superannuation funds to confirm the financial counsellor they’re dealing with is, in fact, a financial counsellor.
AIST believes improving this identification process will reduce complications for fund members when they try to engage with their fund, improving the members' overall experience. It is hoped this will be particularly useful for vulnerable groups seeking assistance with their super, such as many Aboriginal and Torres Strait Islander peoples.
AIST member funds are now able to access the register, free of charge. If you would like to learn more or would like to access the register please contact firstname.lastname@example.org or, alternatively, contact AIST Research Officer, Jake Sims, at email@example.com or on (03) 8677 3800.
Labor’s housing affordability proposals a welcome step: AIST
AIST has welcomed new measures proposed by the Federal Labor Party to tackle housing affordability.
Announced last Friday, Labor has released an eight point housing affordability plan:
- Reform negative gearing and capital gains tax concessions;
- Facilitate a COAG process to introduce a uniform vacant property tax across all major cities;
- Restore the general ban on direct borrowing by self-managed superannuation funds;
- Increased foreign investor fees and penalties;
- Establish a bond aggregator to increase investment in affordable housing;
- Boost homelessness support for vulnerable Australians;
- Getting better results from the National Affordable Housing Agreement;
- Re-establish the National Housing Supply Council and the Minister for Housing.
In a media release issued last week, AIST CEO Eva Scheerlinck said that the measures could help first home buyers by reducing competition from investors and also help reduce risk in the self-managed super sector.
Ms Scheerlinck also welcomed Labor’s proposal for a bond-aggregator investment model that could make it easier for institutional investors, such as pooled super funds, to invest in housing and improve the supply of affordable housing for low income earners and vulnerable citizens.
Funding grants for women’s leadership development
Women & Leadership Australia (WLA) is administering a national initiative to support the development of female leaders across Australia’s Finance and Professional Services Sector.
The initiative is providing women with grants to enable participation in a range of leadership development programs.
The leadership development programs are part-time and delivered nationally via WLA’s blended learning model. Scholarship funding is strictly limited and will be awarded based on a set of selection criteria being met.
Find out more and register your interest by completing the Expression of Interest form here prior to June 7, 2017: http://www.wla.edu.au/assoc-june17.html
Volunteers wanted for the Big Super Day Out in QLD
AIST and First Nations Foundation are seeking people to volunteer their time and expertise to help members of the Indigenous community sort out their super at the Big Super Day Out in Brisbane.
The Big Super Day Out – organised by AIST’s charity partner First Nations Foundation – will be a fun day including entertainment, giveaways, prizes and is your opportunity to help the Indigenous community better engage with the super system.
We are seeking a range of volunteers including:
- RG146 compliantadvisers comfortable with navigating the myGov website and providing general advice if necessary;
- Passionate volunteers from the super industry happy to assist with ad-hoc duties including collecting data, directing foot traffic, and more.
Volunteers must be available for a three hour shift between 9AM to 3PM on Friday 7 July 2017. Sponsors will be allocated volunteer positions based on their sponsorship agreements. Non-sponsors will be allocated volunteer positions on a first-received expression of interest basis.
Interested parties can contact First Nations Foundation with their expression of interest by 1 June 2017 on (03) 9670 5904 or email firstname.lastname@example.org