- AIST Policy News - 7 December 2017
AIST Policy News
AFCA Bill passes senate
The establishment of the Australian Financial Complaints Authority (AFCA) – which will absorb the Superannuation Complaints Tribunal (SCT) – is one step closer after the Bill was passed the Senate this week.
The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 passed the Senate this week along with a number of amendments, which provide for:
- AFCA to be independently reviewed no later than 18 months of coming into effect;
- ASIC to have a directions power to ensure the scheme is sufficiently financed;
- AFCA to issue directions to parties to a complaint that prevents them from disclosing documents and information related to the complaint.
The Bill overall sets out mechanisms for the establishment of AFCA and the abolition of the Superannuation Complaints Tribunal. It will also require superannuation funds to participate in a new internal dispute resolution framework.
It is expected that the Bill will be introduced into the House of Representatives in early 2018 for further consideration of the Bill and the amendments.
The Government is pursuing its objective for AFCA to be operational by 1 July 2018.
Home scheme gets green light but with amendments
Earlier this week the Senate passed the Government’s tranche of Bills that will establish the First Home Super Saver Scheme (FHSS), a budget measure announced in May 2017.
The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 and First Home Super Saver Tax Bill 2017 were passed by the Senate this week. The Reducing Pressure on Housing Affordability Measures No. 1 Bill was passed by the senate with amendments, meaning that it will need to go back to the House of Representatives for final approval before becoming law.
These Bills enable first home savers to make voluntary contributions into their super funds and to withdraw those contributions and associated earnings at a later date for the purchase of their first home.
From 1 July 2018, first home buyers will be able to withdraw voluntary superannuation contributions they’ve made since 1 July 2017, along with a deemed rate of earnings, to help buy their home.
The Bill was amended to require an independent review of the operation of these measures 18 months after the Bill receives Royal Assent as well as to allow individuals who suffer financial hardship to withdraw funds under the First Home Super Saver Scheme even though they may have previously owned a home.
AIST will continue to engage with government and the regulator about the finer details of this legislation and will keep members updated as more information comes to hand. For further information contact Richard Webb at firstname.lastname@example.org
Governance/outcomes bills fail to win crossbench support
The Turnbull Government has this week pulled four major superannuation Bills off its agenda for this year due to lack of crossbench support.
These Bills include the Trustee Governance Bill, the Member Outcomes Bills (no 1 and no 2) and the Objective of Superannuation Bill.
It is the second time the governance Bill has failed, with the crossbench blocking an earlier attempt in 2015. They then lapsed when the 2016 election was called.
The legislation sought to mandate the make-up of superannuation fund boards to include one-third independent directors and an independent chair. The members’ outcomes Bills included measures to introduce a member outcomes test for MySuper funds but not Choice funds. AIST was particularly concerned that the outcomes test did not prioritise net returns.
The Bills were opposed by Labor and the Greens which meant support from crossbenchers including Pauline Hanson’s One Nation group, the Nick Xenophon Team and Derryn Hinch was necessary for it to pass the Senate.
The failure of the Bills came in the wake of the announcement of the Royal Commission into the finance sector last Thursday, which will include an examination of whether super funds are operating in members’ best interests.
While the Government has insisted the legislation is not off the agenda and will be reintroduced next year, the legislation is unlikely to be passed by the Senate in its current form.
Productivity Commission survey update
AIST is working closely with member funds and ISA to address continuing concerns about the Productivity Commission survey of super funds.
While participation in the survey is not compulsory for funds, it has a due date of Wednesday 13 December 2017 and participation is strongly encouraged by the Productivity Commission.
Notwithstanding this, very many funds are still awaiting further information about their concerns with the survey and the management of associated risks. These concerns include legal, function and question design issues. We remain particularly concerned about the lack of legal remedies and protections available to funds for data breaches and mishandling.
Following meetings with members, AIST and ISA undertook to continue constructively engaging with the Productivity Commission to urgently seek resolution of these issues.
AIST and ISA have again met with the Productivity Commission about our concerns. Yesterday, the Productivity Commission has responded to AIST and the CEOs of all superannuation funds. If you haven’t received a copy of the letter and wish to do so please contact AIST senior policy manager David Haynes at email@example.com.
A further meeting of funds is being held on Monday December 11. Member funds are invited to attend and can contact David for more information. The meeting will discuss the Productivity Commission’s response, our ongoing concerns, possible responses, and the more recent fund governance survey that has been sent to fund CEOs.
We will continue to keep members updated and are happy to discuss any questions our members may have about this process.
ATO warns on tax minimization retirement planning involving SMSFs
The Australian Taxation Office (ATO) has created a new resource to help educate taxpayers and their advisers about tax minimization schemes involving Self Managed Super Funds (SMSFs).
The ATO has uncovered a number of new retirement planning arrangements involving the use of SMSFs. The ATO says these arrangements often claim to help people minimise their tax or avoid paying tax by channeling money inappropriately through their SMSF.
In an effort to protect individuals from inadvertently getting caught up in these types of arrangements the ATO has created Super Scheme Smart to educate taxpayers and their advisers, so they know what to look out for and where to get help.
More information is available through these links:
Industry Funds Forum become part of AIST
Industry Funds Forum (IFF) has become part of AIST following an agreement between the two industry associations.
The merger – formally announced last week - will enable the chief executive officers of the 18 Australia’s largest industry super funds who make up IFF’s membership to engage with a wider group of profit-to-member fund CEOs within the AIST structure to discuss the issues impacting our industry and funds. The inaugural AIST CEO forum is being held in Melbourne today.
AIST CEO Eva Scheerlinck said IFF was a natural fit with AIST’s policy and research work as well as the Institute’s peer-to-peer professional development programs.
IFF’s most recent chair, Julie Lander, said becoming part of AIST would provide more opportunities for fund CEOs to be actively involved in shaping policy and sharing information, ideas and views in a collegiate environment.
Ms Lander said IFF project highlights included input into SuperStream data standards, the insurance in super working group and FOFA. The opportunities to liaise directly with representatives of the regulators had also brought about improved understandings and practical implementation of new regulations or guidelines for all parties.
Ms Lander thanked those who helped drive the success of IFF including previous Chairs, Ian Silk and Damian Hill, as well as the Executive Officers, in particular, Helen Hewitt and Chris Matthews.