Policy & Research Archive

AIST Policy News

APRA to scrutinize under-performing funds

APRA has today confirmed that it will meet with the trustee directors of super funds it has identified as either not having consistently delivered quality member outcomes or being unable to deliver these outcomes in the future.

The move follows APRA’s assessment of all RSE licenses under its supervision, based on data provided to APRA by each super fund over the past three years.

In a letter to all RSE licensees, APRA’s chair Helen Rowell said the regulator would require funds to develop a strategy to address the identified weaknesses “in a reasonably short period”. The funds involved will be required to engage with APRA on a regular basis to monitor the implementation of that strategy.

Throughout this period, if it becomes the clear the fund is unlikely to be able to continue to operate in the best interests of its members, APRA expects the fund to consider transferring its members to a more suitable product or fund.

APRA’s latest announcement coincides with ongoing industry consultation on legislation to increase the regulator’s powers and introduce a specific outcomes test for MySuper products. Today’s letter – which includes an outline of APRA’s methodology for assessing member outcomes and fund sustainability - relates to all RSE licensees, not just MySuper products.

AIST is holding a meeting with members tomorrow to discuss APRA’s proposals to strengthen operational governance. Dial-in facilities are available.

Further details, contact AIST senior policy manager David Haynes at Dhaynes@aist.asn.au

Trustee input sought on draft insurance code

The development of the Insurance Code of Practice for trustees is well underway and a draft should be available for consultation before the end of September.

The Insurance Code of Practice – that is being developed by the Insurance in Superannuation Working Group (ISWG) – seeks to address areas of the insurance in superannuation space identified by the government including:

  • Inappropriate erosion of account balances due to insurance premiums;
  • Strengthening claims handling processes and timeframes; and
  • Clarity around premium adjustment mechanisms.

AIST will be organising trustee consultation sessions on the draft code in September and October, and is also interested in hearing from the Chairs of insurance and claims committees, as well as any other trustee director with an interest in helping shape default insurance offerings within super.

If you are a trustee who would like to be part of the consultation process please contact Jo Crooks at jcrooks@aist.asn.au or 03 8677 3800.

Meanwhile, information on work done to date by the ISWG continues to be updated on the AIST website and members will be kept informed with key developments as they arise.

Govt announces steps to tackle SG non-compliance

The Government this week announced a package of reforms aimed at reducing the $2.6 billion superannuation guarantee (SG) gap.

AIST broadly welcomed the package that was announced on Tuesday following the release of new data on the SG gap from the Australian Taxation Office (ATO), while also calling for further steps to be taken.

Key elements of the reform package include:

  • Increased reporting - superannuation funds now to report contributions received more frequently, at least monthly, to the ATO.
  • More details on the Government’s timetable for Single Touch Payroll rollout, with a phase in for small employers to start from 1 July, 2019.
  • Enhanced recovery power for the ATO, including strengthening director penalty notices and use of security bonds for high-risk employers, and stronger powers to deal with repeat offenders.

The figures released by the ATO show the SG ‘gap’ has cost workers $17 billion since 2009.

In a media release issued following the announcement, AIST CEO Scheerlinck said requiring small employers to adopt Single Touch Payroll for super payments was a critical reform needed to address the issue of unpaid super.

AIST notes that moving to electronic payment systems will give the ATO near-real time visibility of an employee’s wage and super payments to workers, and allow enforcement to be far more immediate.

However we also argue that it is crucial that employers be required to pay super at least monthly (though, ideally, in line with wage payments) and to record actual benefits paid on the employee’s slip. Currently, employers are only required to pay superannuation guarantee (SG) on a quarterly basis.

The issue received strong media coverage – you can view AIST coverage on News.com.au here.

Members seeking more information can contact AIST senior policy manager David Haynes at dhaynes@aist.asn.au

AIST fact sheet on operational due diligence reporting

AIST has produced a fact sheet to provide AIST member funds with more clarity and direction on investment manager operational due diligence (ODD) reporting.

The Australian Prudential Regulation Authority (APRA) expects funds to undertake ODD reporting in order to understand, quantify and manage operational risk inherent in appointing an external fund manager. The reporting aims to put a spotlight on the many and wide-ranging processes that need to work effectively for an investment manager to deliver to an agreed mandate. Such processes include the ability of the manager to stay in business and the culture that exists within the manager’s operations.

Earlier this year, AIST’s ODD Working Group released an ODD Guidance note as a cost-effective framework to help AIST member funds meet their due diligence obligations. The Guidance Note has been adopted by many funds, ODD providers and by more than 35 fund managers. 

While many funds have made a firm start on the ODD reporting journey, the industry approach is still evolving. The Working Group is meeting in November to review and enhance reports and provide feedback to providers involved in the review process.

The latest fact sheet can be distributed to fund managers to guide them when considering the appointment of an ODD provider.

SuperStream saving $2.4 billion per year

A new report released by the Australian Taxation Office (ATO) this week has shown that 95 per cent of superannuation payments are now digital following the five-year SuperStream project rollout, resulting in savings of $2.4 billion per year.

SuperStream is one of the largest ever changes to Australia’s financial system, with an estimated investment across the industry of $1.5 billion. The report details the benefits arising from the ‘SuperStream’ Program up to December 2016.

More than one million businesses have been involved in the rollout, with over 800,000 employers, over 200 APRA funds and approximately 350,000 self-managed superfunds now experiencing the benefits of SuperStream reforms.

The shift to digital payments has enabled faster rollover of members’ monies from fund to fund and greater consolidation of accounts, which has helped to decrease the number of lost accounts.

The report identifies an improved employer experience due to simplified electronic processes resulting in super contributions from employers sent through a single channel. This reduces the average time employers spend processing superannuation contributions by 70 per cent.

In a media release issued by the ATO on Tuesday, AIST CEO Eva Scheerlinck said the contribution of SuperStream to a better superannuation system was enormous.

“The stronger protection of members’ savings through account consolidation and faster allocation of funds is real, sustained and substantial. SuperStream has built a base that we are continuing to work with the ATO on building a more efficient system,” Ms Scheerlinck said.

ATO pushes ahead with new reporting process for funds

The Australian Taxation Office has confirmed it will proceed with its new superannuation reporting process, which includes the implementation of the new Member Account Transaction Service (MATS).

The new process will change the way APRA-regulated funds report member data to government and shift the current annual reporting framework to event-based reporting.

The process – which has been developed in close consultation with AIST and other industry representatives – considers the need to accommodate future policy changes and streamline the existing reporting framework, including the Member Contribution Statement (MCS), to meet the needs of members, funds and government. The design builds upon the investment in SuperStream and supports the government’s superannuation Budget changes and the introduction of Single Touch Payroll.

Importantly, MATS will make it easier for members to spot when their employer misses a contribution, and give the ATO more immediate information about what employers are doing with super. Ultimately, this reporting will feed through to greater visibility of contributions and balances for both members and the ATO. 

MATS is just one component of the APRA-fund superannuation reporting transformation, which also includes capturing data required to meet the government’s superannuation 2016 Budget changes. The Transfer Balance Account Report (TBAR) will be part of the transitional arrangements while industry works to design and implement MATS in 2018–19.

AIST members are continuing their work with the ATO and other industry stakeholders to develop a more detailed design, and implementation strategy.

More information outlined in the ATO report here. Members seeking further information can contact AIST senior policy manager David Haynes at dhaynes@aist.asn.au

Nominations closing soon: AIST scholarships worth $10,000

Nominations for the AIST trustee director and fund staff professional development scholarships close on Thursday 14 September.

AIST awards a Leadership Development Scholarship to both a trustee director and a fund staff member up to the value of $10,000 (AUD) each year to recognise their commitment to the profit-to-member superannuation industry and the members of their fund.

The goal of AIST’s Leadership Development Scholarships is to provide unique access to educational opportunities for the recipients that will benefit their fund and the fund’s members.

This award has a specific judging criterion which focuses on three core areas:  Personal/Professional Development, Benefit to Fund and Benefit to Members. The judging criterion in each core area is listed as a set of questions/statements.

You are able to enter yourself, or nominate someone else. All entries are kept confidential and the nominee will not be contacted prior to the event unless you wish AIST to do so. All communication will be with the nominator.

Applications take less than 20 minutes so make sure you put your nomination today to have a chance to win and be recognised by your industry and peers.

In case you missed it: ATO SuperStream Engagement Forum

Video recordings, presentation slides and related documents from the SuperSteam industry engagement forum held in Sydney this week are now available.

The recent SuperStream industry engagement forum – held last Tuesday – attracted 110 people to the Darling Harbour International Convention Centre, Sydney and more than 500 people participating via livestream.

The ATO hosted the forum with support from AIST, offering attendees the opportunity to engage with industry colleagues and hear the latest information on SuperStream implementation.

The forum featured a range of speakers from the ATO and industry, including keynote speaker James O’Halloran, ATO Deputy Commissioner Superannuation and AIST’s Eva Scheerlinck via video. Discussion topics included the release of the SuperStream benefits report, roadmap of change, the ATO’s system improvements, and the future of fund reporting, which aligns to the reform changes Revenue and Financial Services Minister Kelly O’Dwyer announced on the day.

There was also an industry Q&A discussion on working together for better member outcomes, a workshop titled ‘what does the SuperStream business-as-usual landscape look like’, and a joint ATO/industry panel session on the APRA fund superannuation reporting transformation.

The video recordings, presentation slides and related documents are available from the ATO website.

AIST members can now read about and watch previous ATO live stream events; view the SuperStream roadmap; and read about the SuperStream program benefits report.


Cbus to tackle Kokoda Trek

Cbus coordinator Steve Gaske will take on the Kokoda Trek to raise money to fund suicide prevention programs run by MATES in construction.

MATES in Construction is a charity established in 2008 to reduce the high level of suicide among Australian construction workers.

The trek will take place from the 1st of September to the 10th of September and funds raised will go towards continuing the work MATES in Construction do across the construction industry to reduce the prevalence of suicide.

Steve is aiming to raise $5,000 for the charity. Donations are tax deductible and you can donate here.

Anyone across Australia experiencing a personal crisis or thinking about suicide can contact Lifeline 24/7 on 13 11 14 for confidential support.