Superannuation Alert - 07.03.13

Financial Services eBulletin - 7 March 2013

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry and is in addition to our Superannuation Update, which analyses the main developments of interest in more detail.

  • On 22 February 2013, the ATO updated its Trans-Tasman retirement savings portability webpage. The Trans-Tasman retirement savings portability scheme "permits the transfer of retirement savings between the Australian Prudential Regulation Authority (APRA), regulated superannuation funds and New Zealand KiwiSaver funds".
  • On 25 February 2013, the ATO warned that it will take enforcement action against SMSF trustees who do not comply with the superannuation laws. ATO reported that it charged a trustee under section 202 of the Superannuation Industry (Supervision) Act 1993 for dishonestly contravening a civil penalty provision for withdrawing almost 100% of fund assets without satisfying a condition of release as a loan to "associated persons". The trustee pleaded guilty and was sentenced to six months imprisonment serving a minimum of 14 days.
  • On 27 February 2013, the ATO released an updated listing of the key superannuation rates and thresholds that apply in relation to concessional contribution caps and benefits, employment termination payments, super guarantee and co-contributions.
  • On 4 March 2013, the Superannuation Legislation Amendment Regulation 2013 (Regulation) was registered to give effect to various requirements arising from the MySuper reforms, including insurance and accrued default amounts. Note that, following the consultation process, changes have been made since the Exposure Draft of this Regulation. The Explanatory Statement provides, among other things, that “the Regulation
    • ensures that a trustee provides a member of a MySuper product with a notice of a material change or significant event, where the member’s balance in the MySuper product is moved to any other product or investment option, upon the recommendation of the trustee or when they are attributing the member’s accrued default amount to a MySuper product within the fund, or are moving the accrued default amount to another fund;
    • requires superannuation funds to provide, rather than only offer, a minimum amount of death insurance to members of MySuper products in order to be able to receive superannuation contributions from employers on behalf of employees who have not chosen a fund;
    • ensures that the existing definition of ‘permanent incapacity’ in the SIS Regulations (Superannuation Industry (Supervision) Regulations) applies for the purposes of the SIS Act (Superannuation Industry (Supervision) Act), supporting the new requirement in the SIS Act that superannuation funds provide members of MySuper products with permanent incapacity benefits;
    • prohibits trustees from providing insured benefits for members unless they are supported by an insurance policy from an insurer, that is, a fund will not be able to self-insure; and
    • provides that life and total and permanent disability (TPD) insurance is compulsory for MySuper members if the trustee is reasonably satisfied the insurance cannot be provided on an opt-out basis at reasonable cost, or at all.”
  • On 4 March 2013, APRA released Prudential Practice Guide SPG 410 – MySuper Transition (SPG 410) which sets out APRA's requirements in relation to the "identification of accrued default amounts, the preparation and implementation of a transition plan addressing the attribution of these amounts to a suitable MySuper product and reporting of these amounts to APRA". This guide aims to assist registrable superannuation entity licensees in the transition to MySuper. 

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.