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As reported in our policy alert earlier today, the Senate has agreed to a 12 month extension to changes to indemnification prohibitions contained in the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020.
The new timeline was put forward by Labor as an amendment to the Bill, which was passed by the Senate today. The amendment follows recent advocacy by AIST with relevant stakeholders including the government and other political parties. The changes to Section 56 will now come into effect on January 1, 2022, rather than from January 1 next year.
The changes to section 56 of the SIS Act mean that super trustees and trustee directors will be held financially liable for a wider range of penalties incurred.
Under the new law, superannuation trustees and trustee directors will not be permitted to use trust assets to pay a criminal, civil or administrative penalty incurred in relation to breaches of Commonwealth law.
Under the existing law, the only circumstances were superannuation trustees and trustee directors are unable to use trust assets to pay a liability for breach of trust is if the trustee fails to act honestly in a matter concerning the entity, or intentionally or recklessly fails to exercise, in relation to a matter affecting the entity, the required degree of care and diligence.
For more information on Section 56 and other changes in the Bill click here.
After a lengthy consultation, the Department of Home Affairs has tabled the Security Legislation Amendment (Critical Infrastructure) Bill 2020 which includes provisions called for by AIST that aligns the Bill with reporting obligations in existing regulations.
The Bill now aligns with the reporting obligations required under the CPS 234 regulatory framework which will ensure consistency across the industry.
Several other concerns raised by AIST have also been addressed including a revision of the definition of a critical superannuation asset so that it captures assets that are critical to the security and reliability of the financial services and markets sector. The accompanying rules may designate specified RSEs or outline the requirements of an asset that is critical to the security and reliability of the financial services sector.
AIST raised further concerns over the annual reporting and sign-off requirements. The exposure draft required funds to produce an annual report (confirming that the critical infrastructure risk management program was up to date and hazard reporting) 30 days after the end of the financial year. The draft bill has been amended to require an annual report to be submitted to a relevant Commonwealth regulator within 90 days after the end of the financial year. The sign-off provisions relating to the annual report have also been amended. The exposure draft required all members of the board to sign off on the annual report. AIST argued that this requirement was impracticable. The draft bill now only requires that the report be approved by the board.
A copy of the draft bill can be found here.
The Government’s Financial Sector Reform Bill to allow for the implementation of key recommendations of the Financial Services Royal Commission was introduced to the House of Representatives this week.
The Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 contains three reforms, with most of the changes scheduled to come into effect on 1 July 2021.
The Bill limits the charging of advice fees but allows for funds to continue to offer intra-fund advice, and importantly – in a change from the draft legislation, allows for funds to deduct fees for non-ongoing financial advice from MySuper products. AIST welcomes this change, which follows industry advocacy pointing out the benefit and appropriateness of intra-fund and one-off advice for members who are in MySuper products.
The Bill and Explanatory statement can be read here
Debate over home ownership and superannuation ramped up in Parliament this week with Liberal MP Tim Wilson putting forward a motion asking Parliament to recognise the need for young Australians to tap into their super for a housing deposit.
Kicking off a heated exchange involving five MPs from both sides of the House, Tim Wilson called for home ownership to be prioritised ahead of the need to save for retirement, labelling super funds who invested in build-to-rent housing developments “wannabe feudal lords”.
Opposing Mr Wilson’s motion as superficial and dangerous, Labor’s Dr Daniel Mulino said the Coalition had tried to weaken the super system at every turn.
He noted that the recently released Retirement Income Review did not recommend early release from super in order to buy housing and that such a “lazy” policy had little support.
Click here to read the transcript of the debate.
The Treasury Laws Amendment (2020 Measures no 4) Bill 2020 has been introduced to Parliament to enable the transition and subsequent closure of SCT complaints to AFCA.
The Bill also includes amendments that provide for the transfer of records and documents from the SCT to ASIC, as well as the remittal of matters on appeal by the Federal Court. The Minister will also be gifted with rule-making powers to prescribe other matters of a transitional nature. If passed the changes will come into effect following a proclamation by the Treasurer or the day after 4 years of the commencement of the AFCA Act (5 March 2022).
Moves to allow New Zealanders with lost and unclaimed super in Australia to have it paid into their KiwiSaver account have been set in motion following the passage of the Treasury Laws Amendment (2020 Measure No.5 ) BILL 2020 through the House of Representatives this week.
The Bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLM Act) to enable individuals to direct the Commissioner to pay amounts the Commissioner holds in respect of them under the SUMLM Act directly to KiwiSaver scheme providers. The Bill further allows for interest to be made payable on monies paid to a KiwiSaver scheme provider. If passed through Parliament the changes will come into effect on a single day to be fixed by proclamation. However, if Part 1 of the Bill does not commence within 12 months of receiving Royal Assent, the Part commences on the day after the end of the 12 month period. This is to allow sufficient time for both Australian and New Zealand governments to pass corresponding legislation.
As reported earlier this week, ASIC has deferred the first reporting date for superannuation funds to disclose their portfolio holdings because the regulations supporting the requirements have not yet been made.
The relief from portfolio holdings disclosure was originally set to expire on 31 December 2020, with disclosure of information about a fund's holdings required on its website no later than 90 days from its reporting date (either 31 December or 30 June). ASIC's deferral allows additional time for the Government to make the regulations.
ASIC has implemented the deferral by amending the first reporting day in ASIC Class Order [CO 14/443] for superannuation funds to disclose their portfolio holdings to 31 December 2021. Depending on when regulations are made, ASIC may shorten the period of the relief by a further legislative instrument.
Against a background of increasing cyber attacks on businesses across the globe, the Council of Financial Regulators (CFR) has released a Cyber Operational Resilience Intelligence-led Exercises (CORIE) framework to test and demonstrate the cyber maturity and resilience of institutions within the Australian financial services industry.
The CORIE framework has been developed to aid preparation and execution of industry-wide cyber resilience exercises.
A key objective of the CORIE framework is to provide data and reporting to inform relevant Australian regulators of systemic weaknesses that may present a risk to the integrity and stability of Australian financial markets. The framework also aims to identify actions to uplift the cyber resilience of financial institutions.
CORIE's exercises will mimic the tactics, techniques and procedures (TTPs) of real-life adversaries, creating and utilising tools, and using techniques that may not have been anticipated and planned for. These exercises measure the ability of an organisation to detect, respond and recover from the operations of a real adversary based on such TTPs.
Click to download the framework
The number of applications to the COVID early release scheme for the week ending 29 November was 10% higher than the previous week, with 22,000 applications made of which 7000 were repeat applications.
According to the latest APRA data, the total number of initial applications since inception of the scheme is around 3.4 million and repeat applications are 1.4 million.
More than $35 billion in early release has been paid out by super funds since the scheme began.
The current status of superannuation Bills currently before Parliament can be found here.