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ATO approves 466,000 early release applications
The ATO has approved 466,000 applications for the COVID-19 early release super scheme, totalling $3.8 billion.
Treasurer Josh Frydenberg announced today that the average withdrawal is around $8,000.
While there were a few teething problems in the first few days of the commencement of the Scheme, AIST’s discussions with the ATO and other stakeholders suggest that most of the major ones have been resolved.
A number of funds did not receive their files containing approved applications when expected however AIST understands that as of midday today (Thursday) all funds have received files containing all applications approved by the ATO for the period Sunday 19 to Wed 22 April inclusive.
There have been range of errors made by applicants, including:
Providing incorrect bank account details and needing to change them – this must be done through the super fund and a member cannot reapply and provide different details through the ATO
Requesting the incorrect amount of money e.g $10 instead of $10,000 – the member should contact the ATO and request a revocation. This will be sent to the fund. Where the monies have not been paid, a new request will be sent. Where the monies (e.g $10) have already been paid, the ATO will work with the member and the fund to resolve
Requesting money from a recently closed account (not yet updated on MyGov)- the member needs to contact the ATO who will work with them to do a new request to open account.
In addition, members are relying on the balance on MyGov which does not correspond to their current balance and therefore in some cases not accessing as much money as they could. In this case the emphasis is on the member ensuring they know their current balance as they do not get a chance to apply again in the same period for a ‘top up’ amount.
Members are also requesting monies from TTR accounts. Our understanding is that monies can be taken from an accumulation account where the member holds one as the request is the release of monies from a superannuation entity (and not a specific account).
Members are also able to lodge multiple applications prior to an application being approved due to system limitations at the ATO. However, the ATO will only process the first application received and will reject the others. The ATO is examining how it may be able to improve this experience.
The ATO is working with the super industry to address these issues and will shortly be releasing an updated FAQ document.
ATO super early release Q&As
As outlined in AIST policy alerts earlier this week, the ATO has updated Q&As to address overseas eligibility, how members will be notified of the outcome of their application and information relating to funds on the access and management of daily early release files.
The ATO has shared an updated version of its early release of super design and implementation information document with the new and amended Q&As.
New questions are marked with an asterisk (*). Updated answers are in bold font.
ASIC adjusts Moneysmart Calculator
Also outlined in the policy alert early this week, ASIC is adjusting the assumptions used to power its Moneysmart Calculator, a popular tool for consumers and industry.
ASIC plans to review and simplify its superannuation and retirement planner calculators, including using a single set of assumptions.
The default assumptions in this calculator reflect Treasury’s long-term retirement income models and includes changes to the wages deflator.
The ASIC Corporations (Generic Calculators) Instrument 2016/207 does not require any amendments, and ASIC has advised that no action is needed by superannuation trustees in order to continue to rely on calculators.
Treasury’s long-term retirement income modelling assumptions can be found in the 2019 Treasury Research Institute paper ‘Accumulation of superannuation across a lifetime’.
APRA launches new early release data collection
APRA has launched its new data collection to assess the progress and impact of the Government’s temporary early release of superannuation scheme.
From next week, super funds will need to complete and submit APRA’s new Early Release Initiative (ERI) data collection form weekly until further notice. The ERI reporting form will gather a range of information from RSE licensees, including the number and value of early release benefits paid to superannuation members and the processing times of those payments.
It will help the Government, APRA and other stakeholders monitor the take-up of the new scheme among superannuation members, and ensure licensees are processing eligible applications in a timely manner.
APRA intends to publish the data at both the industry and fund level. Reporting this data using the ERI reporting form is expected on a best endeavours basis, and APRA will implement reporting through a legally binding reporting standard if the response from industry does not meet the objectives of the data collection.
The first ERI data collection is due on 29 April 2020 for information as at 26 April 2020. The ERI reporting template and some frequently asked questions about the new collection are available here.
Regulators release comparison data on life insurance claims and disputes
APRA has this week released its Life Insurance Claims and Disputes Statistics publication, covering a rolling 12-month period from 1 January 2019 to 31 December 2019.
The data – part of a joint project between APRA and ASIC - presents the key industry and entity-level claims and disputes outcomes for 20 Australian life insurers writing direct business.
The data shows a claims paid ratio for death cover in group super at 80% compared to 43% where the individual is advised, and 41% were the individual is not advised.
Similarly, the claims paid ratio of trauma cover is also a lot higher for group super at 80%, compared to 45% where the individual is advised and 58% where the individual is not advised.
The claims ratio is the dollar amount of claims paid out in the reporting period as a % of annual premium receivable. The higher percentage figure for group super points to the generally higher costs of individual life and trauma insurance products compared to Group products.
Click here for all the latest data on a range of other outcomes.
RBA crunches the numbers on the economy
The RBA has crunched the numbers on key economic indicators as the bank moves to assess what is likely to be “the biggest contraction in national output and income that we have witnessed since the 1930s”.
In a speech this week, RBA Governor Philip Lowe noted that putting precise numbers on the magnitude of the contraction was difficult. That said, the bank’s current thinking is along the following lines:
Commenting on what were “inconceivably” large numbers just a few months back, Mr Lowe said the numbers spoke to the “immense challenge faced by our society to contain the virus.”
Revised Insurance in Super Code released
The Insurance In Superannuation Voluntary Code of Practice has been revised to align with the Protecting Your Super and Putting Members' Interests First legislation.
The Code-owners (AIST, ASFA and FSC) in consultation with the Code Review Committee have now made the other necessary changes to align the Code with these legislative changes concerning insurance in superannuation.
The Code-owners have also changed the reinstatement of cover clause in response to some super funds receiving differing advice about the legally-permissible operation of the reinstatement cover clause in light of the legislation. Despite our approaches, APRA (and other government agencies were unable to assist in the resolution of this issue.
The revised Code can be seen here and will be published on the AIST website. A document identifying each of the changes made can be seen here.
AIST appreciates and thanks the many funds that provided feedback on the proposed changes to the Code.
Please contact AIST Senior Policy Manager David Haynes at email@example.com if you would like to discuss any issues relating to the Code.
Banks urged to cap credit card rates and pause debts
Consumer advocate CHOICE has called on Australian banks to cap credit card interest rates at 10% and pause debts for Australians facing financial hardship as a result of the COVID crisis.
CHOICE this week outlined five actions banks could take to help those customers who were now out of work and struggling.
CEO Alan Kirkland said banks needed to do more to help Australians who are now out of work but still paying over 20% interest on credit cards.
“The fair thing to do is acknowledge that we’re in a record low interest rate environment and ensure that all bank customers who are struggling to make repayments have access to relief.” Mr Kirkland said. “Banks shouldn’t forget the lessons learned from the Banking Royal Commission. They need to go further to look after their customers in these difficult times.”
CHOICE’s five urgent COVID-19 actions for banks are:
FRC to monitor financial reporting and audit issue during crisis
The Financial Reporting Council (FRC) has established a COVID-19 Working Group to meet once a week during the crisis.
The role of the FRC Working Group – which includes representatives from APRA, ASIC, the ASX and Treasury - is to continuously monitor financial reporting and auditing issues and consequent regulatory and standard setting implications of COVID-19.
Other key matters concerning the FRC are outlined in its latest communique.