Superannuation Alert - 2.5.13

Financial Services eBulletin - 2 May 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 April 2013, the Government released for comment Exposure Draft - Tax Laws Amendment (2013 Miscellaneous Measures No. 1) Bill 2013: MySuper loss transfer and asset roll-over and the associated explanatory memorandum which are proposed to amend the Income Tax Assessment Act 1997. According to the explanatory material, "the amendments ensure that a complying superannuation fund that mandatorily transfers account balances of default members to other funds under the MySuper reforms can transfer losses to other entities; and defer an income tax liability for assets transferred to other entities. Relief is also provided to life insurance companies and pooled superannuation trusts (PSTs) that the transferring fund invests in to support its default members." Comments on the draft Regulation should be submitted to Treasury by 3 May 2013.
  • On 22 April 2013, APRA sent a letter to RSE licences detailing its expectations regarding compliance with the new SuperStream requirements for completing rollover transactions from 1 July 2013:
     
    • in accordance with regulation 6.34A of the SIS Regulations, RSE licensees are to complete rollover transactions within three working days from the date of receipt of a complete rollover request;
        
    • under regulation 6.33D(2) of the SIS Regulations, RSE licensees are to validate member details via the ATO Super TFN Integrity Check (SuperTIC) service on the Standard Business Reporting Website prior to transferring a member's benefit to another fund;
       
    • under section 29JA of the SIS Act, an RSE licensee must report to APRA any significant breach of the three day processing of rollovers or the use of SuperTIC.
       
  • On 30 April 2103, the Government released for comment draft Superannuation Legislation Amendment (MySuper Measures) Regulation 2013 which are intended to give effect to changes arising from legislation implementing the MySuper and governance reforms. Also released was the associated Explanatory Memorandum (Exposure Draft). According to theGovernment's release, the Regulations cover a broad range of matters including:
     
    • making changes to improve transparency including in relation to product dashboards and product disclosure statements; 
       
    • prescribing factors that may be used for a lifecycle investment strategy;  
         
    • clarifying the circumstances in which a person is a defined benefit member to ensure they are excluded from certain MySuper requirements, and gives priority to accumulation interests over defined benefit interests in the event of a winding-up of a technically insolvent defined benefit fund;
       
    • requiring RSE licensees to provide APRA with early disclosure of successor fund transfers and other information; and
       
    • repealing and/or amending existing regulations relating to subject matter that will be dealt with in APRA prudential standards.
       
  • APRA has updated the following FAQs:

    • MySuper and Eligible Rollover Funds
      • FAQ 47: What amendments are required to be made so that, under s. 29TC, the characteristics of a MySuper Product are incorporated in the Governing Rules of the fund?
           
      • FAQ 48: Is attaching a copy of legal advice a sufficient statement under A5.1 of the MySuper application form?
         
      • FAQ 49:Question B2.5 of the MySuper application form states, ‘for each relevant fee category identified at items B2.3 and B2.4, attach a description of the mechanism by which the RSE licensee will establish that the fees charged do not exceed cost recovery.’ Question B2.3 includes the option of an advice fee, which can exceed cost recovery. How should question B2.5 be answered for advice fees? 
         
    • Prudential Standards and Guidance: 
      • FAQ 59:What are APRA’s expectations in relation to the ORFR for RSE licensees of unfunded defined benefit (DB) funds?
         
      • FAQ 60: Does APRA require an RSE licensee to document, within its risk management strategy, its material risk ratings at both inherent and residual levels?
          
  • Hannover Life Re of Australasia Ltd & Anor v Dargan NSWCA 57 The NSW Court of Appeal has overturned a primary judge's decision that an insurer pay a total and permanent disablement (TPD) to Mr Dargan, a member of the Construction and Building Unions Superannuation Fund (Cbus). Mr Dargan, a truck driver, suffered a back injury in 2007 and the NSW Supreme Court ordered the insurer to compensate Mr Dargan the TPD benefit with interest. However, the Court of Appeal held that Mr Dargan was capable of doing "regular remunerative work" as a taxi driver for 20 hours per week. The Court defined regular remunerative work which were the terms used in the policy to exclude casual work, but did not exclude part time work. Mr Dargan was therefore not TPD.

Further information

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