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AIST seeks further consultation with Govt on the Budget super measures
AIST will be raising concerns with the Government about the Budget super measures following various meetings with fund members this week.
While AIST strongly supports the intent of the package of the measures to address underperformance in the super system and reduce multiple accounts, we remain very concerned that the measures in their current form have the potential to do more consumer harm than good.
Concerns across our sector include issues with the proposed performance assessment methodology, concern that consumers could be stapled to dud fund and the reliance on consumer disclosure to address underperformance.
Members who have further concerns are invited to contact AIST’s head of advocacy, Melissa Birks at email@example.com
APRA insurance data reveals strong group life performance
APRA’s updated statistics on life insurance show above average performance for group life insurance when it comes to claims payouts.
APRA’s Life Insurance Claims and Disputes Statistics publication covers a rolling 12-month period from 1 July 2019 to 30 June 2020.
Total and permanent disability claims were paid out through group insurance considerably higher than TPD insurance sold individually outside of super.
APRA changes early release data reporting
APRA has made changes to the Early Release Initiative (ERI) data collection and COVID-19 Pandemic Data Collection (PDC) with some of its requirements being discontinued from 30 September 2020.
After 30 September 2020, only sections 6 – 8 of SRF 921.0: COVID-19 Pandemic Data Collection (Monthly) on operational resilience (eg, fraud risk, fraud profile, & outsourcing risk) and section 5 of SRF 921.1: COVID-19 Pandemic Data Collection (Quarterly) on Early Release of Super payment demographics need to be completed, with this reporting continuing until 31 January 2021.
The information no longer required to be reported is:
APRA’s updated webpage on reporting requirements can be found here.
APRA’s Pandemic Data Collection FAQs have also been updated to reflect the changes.
Meanwhile, the latest APRA figures for the early release scheme there were 26,000 applications to the COVID early release scheme for week ending 11 October.
This represents another drop on the previous week’s 31,000 applications.
Of the applications received by funds, 16,000 were initial and 9,000 were repeat applications. The total number of initial applications since inception of the scheme is around 3.3 million and repeat applications are 1.3 million.
So far, $34.3 billion in early release has been paid out by super funds since the scheme began. The average payment made over the period since inception is $7,401 overall and $8,363 when considering repeat applications only.
Govt action needed to avoid lower retirement living standards
AIST has reiterated its call for policy measures to address the COVID super gap following this week’s release of the Mercer CFA Global Pension Index which saw Australia record a drop in ranking across two key categories.
With Australia slipping in its overall ranking from 3rd to 4th, and only ranking 14th for retirement income adequacy, AIST CEO Eva Scheerlinck said the Government to address the gap in retirement savings created by the COVID pandemic and commit to the legislated timeline to increase the super compulsory rate to 12%.
“Previous analysis by Mercer and AIST has shown that low paid, young Australians will bear the brunt of an estimated $100 billion shortfall in retirement savings due to the COVID pandemic,” Ms Scheerlinck said.
The 2020 Index report notes that the decision by some countries - including Australia - to allow temporary access to pension savings in response to the pandemic has materially impacted the adequacy, sustainability and integrity of those pension systems.
The two top retirement systems in the Index, the Netherlands and Denmark, have not permitted early access to pension assets. Equally concerning is the finding that COVID has increased gender inequality in pension provision.
“The long-term impact of this will mean older people, especially women, will need to work longer and have to settle for a lower standard of living in retirement,” Ms Scheerlinck said.
AIST’s pre-Budget submission in August called for the Government to commit to the legislated increase of the compulsory super rate to 12% and a one-off super contribution of up to $5000 for low income earners who were eligible to access the COVID early release scheme.
The Global Pension Index weightings are 40% adequacy, 35% sustainability and 25% integrity.
More than one in three ERS applicants were low income earners
The ATO has published an interim report of its assessment of applications for COVID-19 early release of super scheme.
As mentioned in a Policy Alert last week, the interim report shows that more than one in three applicants for early release of super had a taxable income of less than $37,000.
Men accounted for 56% of applications (women 44%), and six in ten resident applicants were eligible because they were either unemployed (17%) or had a reduction of 20% or more in working hours (42%).
Additionally, more than four in ten non-resident applicants were on a temporary visa and nearly four in ten were on a student visa.
The report covers applications made between 20 April 2020 and 30 June 2020 and provides data on: