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Reforms see more than 4 million not maintain their insurance
More than 4 million Australians did not maintain their insurance following the implementation of Protecting Your Super and Putting members’ interest first reforms, according to APRA.
Presenting to AIST’s annual Super Insurance Symposium, APRA’s general manager superannuation, Adrian Rees, said the number of accounts with any type of insurance coverage at the end of 1 April 2020, was just under 10 million. This compares to 14 million at the beginning of 1 May 2019. While a significant number, the 4 million actual insurance cancellations was far less than the 7 million member accounts provided with insurance cancellation notices.
Providing an update on APRA’s super data transformation project Mr Rees said:
On recent and ongoing reform:
On SPS 250 and SPG 250:
Enhancements including addressing:
Key issues raised by industry in consultation include:
Revised SPG 250 will provide guidance on these and other matters.
Further consultation on SPS 250 and consultation on initial draft revised SPG 250 likely in Q4:2020 (dates TBC).
APRA reiterates trustee obligations on controlling stake obligations
APRA has reiterated to trustees their obligations under the controlling stake requirements and released updated application forms and instructions for people applying to hold a controlling stake in an RSE licensee.
In a letter sent to superannuation trustees, APRA advised RSE licensees to review their current ownership structures regarding the requirements that have been in place since July 2019.
APRA has also reviewed the process for an applicant applying to APRA for approval to hold a controlling stake in an RSE licensee.
An updated application form and instruction guide to own or control a registrable superannuation entity (RSE) licensee is now available.
AIST seeks clarity on AFCA’s process for legacy complaints
AIST has urged the Australian Financial Complaints Authority (AFCA) to clarify the whether legacy complaints from the Superannuation Complaints’ Tribunal (SCT) will be required to restart the complaints handling process upon transfer to AFCA once the SCT ceases operation.
In a submission to AFCA’s consultation, AIST has broadly supported the proposed rule changes and encouraged AFCA to attempt to resolve transferred complaints in an efficient manner, consistent with current AFCA rules.
As previously reported in Policy News, AFCA is seeking to amend its rules to ensure that arrangements are put in place to manage any remaining complaints business once the SCT ceases operation on 31 December 2020.
AIST’s submission will be available on our submissions page from next week.
For further information, contact AIST Policy and Campaigns Advisor, Sam Lynch firstname.lastname@example.org
Australia well-placed for RegTech
Australia is well-placed for the development of regulatory technology (RegTech) solutions, due to its relatively stable and sophisticated regulatory systems, according to a new paper from the Productivity Commission.
The Productivity Commission ranks Australia third in global RegTech markets behind the US and UK in a discussion paper that explores the use of technology to improve the efficiency of regulators and reduce administrative costs. The Commission notes that many regulators and businesses remain unfamiliar with the possibilities of RegTech, creating barriers for application and procurement.
The Commission suggests RegTech benefits can assist with the increased complexity and quantity of regulatory requirements in some areas, and help tackle areas the high costs of regulatory non-compliance.
Analysis of data tagging and sharing to reduce tax compliance burdens and improve compliance monitoring suggests that the introduction of Single Touch Payroll has generally improved monitoring and compliance of Superannuation Guarantee payments to employees, the paper says.
An additional consideration relevant to super funds in the paper is the need to improve the consistency, structure and use of data, as well as the need to deal with the pain points related to modernising IT systems for better RegTech compatibility.
APRA reports on critical year for financial system resilience
APRA commenced three formal investigations and issued 13 directions to RSE licensees or a connected entity of an RSE licensee; in the year 2019/20.
APRA stated in its annual report that the resilience of the Australian financial system has been severely tested in 2020 but that APRA-regulated authorised deposit-taking institutions (ADIs), insurers and superannuation funds have stood up to the challenge, both financially and operationally.
APRA’s annual report released this week also shows that it imposed additional conditions on the licences of three RSE licensees; issued 715 infringement notices to three institutions for failing to meet their legal obligations to report timely and accurate data to APRA; and applied additional capital requirements to four institutions in response to the outcomes of respective governance self-assessments.
The annual report includes a list of prudential work during the financial year with the regulator citing its MySuper heatmap as a major achievement.
The report notes that the resilience of the Australian financial system was severely tested in 2020 but that APRA-regulated entities, including super funds, had stood up to the challenge, both financially and operationally.
Adjust LISTO to match second stage tax cuts: WIS & ISA
Women In Super and Industry Super Australia have said that tens of thousands of dollars would be added to the retirement savings of more than 700,000 women if the government were to match its stage two tax cuts with a change to the Low-Income Superannuation Tax Offset (LISTO).
The LISTO is currently aligned with the tax-free threshold and 19% tax bracket and matches superannuation guarantee contributions – but the tax cuts announced in the 2020 Federal Budget have moved those brackets up the scale.
In a joint media release, WIS and ISA say that with the LISTO rate stalled at $37,000 taxable income and a maximum tax refunded of $500 a year, hundreds of thousands of women are being left behind.
WIS and ISA’s proposal would give more than 1.2 million Australians a boost in their super savings by increasing the LISTO to cover workers earning up to $45,000.
The changes would benefit 705,000 women who would take home 60% of the extra payments – making women the biggest winner from the measure.
Women In Super Chair, Cate Wood said that the LISTO is important to ensure lower income earners receive some tax relief for saving for retirement.
“Young women on lower incomes have had to access their superannuation to get them through the pandemic. The least the Government can do is to keep the LISTO relevant,” Ms Wood said.
AIST’s weekly update on the status of legislation
The current status of superannuation Bills currently before Parliament can be found here.