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Budget to contain super changes says PM
Prime Minister Scott Morrison has revealed that Tuesday’s Federal Budget will contain changes to superannuation, but there will be no decision about the legislated timeline to increase the SG to 12%.
Responding to questions from the media following his pre-budget address today at the National Press Club, Mr Morrison said the Government was in no rush to release the Retirement Income Review or consider the 12% super issue but would make an announcement before July next year. He did not elaborate on what the super changes might be.
The PM’s main focus of his speech related to government’s announcement of a $1.5 billion boost to manufacturing.
For all the latest on the budget and super, look out for AIST’s special budget edition which will be sent out on Tuesday night.
Mixed report card on member outcomes: APRA
APRA has warned super trustees about applying a “tick-the-box” approach to assessing member outcomes and to consider whether the interests of their members would be better served in an “alternative fund” in the wake of the COVID pandemic.
Speaking at AIST’s Trustees Forum on Wednesday, APRA deputy chair Helen Rowell said trustees had “no excuse” for not understanding the member outcomes prudential standard (SPS 515), which took effect from 1 January this year.
“Ensuring the effective implementation of SPS 515 has only become more critical since the outbreak of COVID-19,” Ms Rowell said. “The financial and operational challenges created by the pandemic pose additional questions that trustees need to reflect on in fulfilling their SPS 515 requirements, and their legal duty to protect members’ interests.”
These COVID-related questions, Ms Rowell said, include whether the board’s strategy is still relevant and whether a merger might be warranted; and whether the assumptions underpinning the fund’s financial projections remain realistic.
Without pointing the finger at any industry segment, Ms Rowell said APRA was concerned about the lax approach taken by some trustees to outcome assessments, notably in the Choice sector.
“For example, some trustees did not document their methodology for determining how members financial interests are being promoted for each of their choice products, having regard to the factors set out in the legislation. This would include an approach to identify the products and the appropriate metrics to be used for assessing their choice products,” Ms Rowell said.
Another area where APRA has observed poor practices is in the selection of peer groups for comparison and benchmarking.
Ms Rowell said selected peer groups were frequently narrow and didn’t include all MySuper products. Similarly, it wasn’t clear that certain peer groups for choice products had been selected, she said.
Regarding APRA’s Superannuation Data Transformation (SDT) and the heatmap, Ms Rowell said the MySuper heatmap was due to be fully refreshed this December with a new, more user-friendly presentation.
However, the choice heatmap would not be published until at least the second half of next year, as the regulator still needed to collect sufficient high-quality data for the estimated 40,000 choice options.
Meanwhile, trustees can expect further engagement from their APRA supervisors as they approach the 31 December deadline for undertaking their first Business Performance Review and the 28 February timeline for the first outcomes assessment.
Over the next few months, APRA will also be publishing FAQs for industry to communicate other key findings from its observations of how industry has implemented SPS 515 to date.
Speakers at ACTU forum reinforce need to go to 12%
An ACTU ‘emergency superannuation summit’ held on Monday to discuss the future of super in the light of recent debate has reiterated the importance of increasing the Superannuation Guarantee to 12%.
More than 500 attendees attending the virtual event heard from former Liberal Leader John Hewson, former ACTU Secretary Bill Kelty, former Chief Executive of the AiG Heather Ridout and Executive Director of Per Capita Emma Dawson. They were joined by aged care worker Sheree Clarke who provided a moving personal account of someone who is facing retiring into poverty.
All speakers argued strongly in favour of increasing the SG to 12%, with several questioning the argument that an SG increase would dampen wage growth.
Bill Kelty outlined the thinking behind the creation of the superannuation system, reminding attendees that superannuation was set up as a key social safety net to be paid for out of the growing productivity of the nation.
Heather Ridout pointed out the strength of the Australian superannuation system, noting that although there was some unfinished business, the system provides Australians with dignity and control, giving everyone access to capital gains and the nation access to investment capital.
John Hewson accused the government of being irresponsible and finding any argument not to increase the SG, which was long-term reform that should be kept.
Data Transformation feedback extended
APRA has extended the due date for pilot submissions on Topic Paper 4 (Expense Reporting) of its Superannuation Data Transformation consultation, giving the industry until 30 October to make a submission.
As reported in last week’s Policy News, APRA has released the final consultation package for Phase One of its project to expand the breadth, depth and consistency of its superannuation data collection.
Topic Paper 4 - Expense Reporting provides details of the proposed changes to reporting requirements regarding expense reporting including:
Derivative transaction reporting exemption
ASIC has confirmed its exemption on determining additional financial markets for the ASIC Regulated Foreign Markets Determination, with the exemption coming into effect on 1 October, 2020.
As reported in last week’s policy news, ASIC has completed a second round of consultation on proposed exemptions to the ASIC Derivative Transaction Rules, which make amendments to:
FRC provides guidance on COVID financial reporting
The Financial Reporting Council (FRC) COVID-19 working group has provided a list of guidance to assist with financial reporting given the challenges posed by the pandemic.
The FRC has collated all key guidance released by ASIC, APRA, the ASX, Treasury, AICD, the Australian Accounting Standards Board (AASB), the Auditing and Assurance Standards Board (AUASB) and CPA Australia.
The FRC COVID-19 Working Group comprises representatives from a range of regulatory bodies and Treasury to continuously monitor the financial and reporting issues and consequent regulatory implications of COVID-19.
During the September meeting, the FRC also discussed the future of financial reporting in the public sector and approved its 2019-20 annual report to be tabled in Parliament in mid-October 2020.
The next FRC meeting takes place on 3 November 2020.
AIST’s weekly update on the status of legislation
The current status of superannuation Bills currently before Parliament can be found here.