Superannuation Alert - 26.03.15

Financial Services eBulletin - 26 March 2015

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

  • On 18 March 2015, APRA member Helen Rowell delivered a speech at the Conference of Major Super Funds, focusing on governance and conflicts of interest, remuneration disclosure, retirement income options and industry efficiency and performance. Highlights include:
    • disclosure of director and executive officer remuneration remains poor across the industry, with a significant number of funds either having apparent errors in their figures on their website, or failing to disclose at all;

    • APRA assessed that approximately 1/3rd of the funds had vulnerable or weak conflicts management frameworks;

    • APRA will continue to focus on related parties arrangements; 

    • the importance of boards and senior management in implementing sound governance and risk management frameworks, including the appointment of independent directors; 

    • APRA's preference for funds to offer retirement income options and communicating to members based on estimated retirement income amount, rather than accumulated lump sums; and 

    • trustees to focus on reducing fees by simplifying their investment arrangements, reviewing insurance benefits provided and making other operational changes. 
  • On 19 March 2015 the Tax and Superannuation Laws Amendment (2014 Measures No.7) Act 2015 received royal assent. The Act amends a range of legislation. The explanatory memorandum provides that the purpose of the bill is to:
    • make the taxation treatment of individuals with excess non-concessional superannuation contributions fairer;

    • to create further capital gains tax exemptions in relation to superannuation entities; 

    • to transfer tax investigation functions to the Inspector-General of Taxation; 

    • to provide certainty for superannuation fund mergers by not penalising transfer of benefits; 

    • to allow taxation officers to disclose tax information to enforce a proceeds of crime order; and 

    • to introduce an "exploration development incentive scheme to encourage investment in small mineral exploration companies undertaking greenfields mineral exploration in Australia."
  • On 19 March 2015 APRA published a letter to RSE licensees on the topic of Prudential Standard SPS 521 Conflicts of Interest (SPS 521) which commenced on 1 July 2013. The letter outlines the outcome of APRA's review of how regulated entities were implementing SPS 521 requirements in relation to conflicts of interest. Overall, APRA concluded that the implementation of SPS 521 was "in its early stages and further steps need to be taken by many RSE licensees to improve conflicts management practices to meet the requirements of the prudential standard." Key areas for development identified by APRA include identification of conflicts, sound governance structures, policies and procedures and roles and responsibilities, and robust related party dealings.

Further information

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