Superannuation Alert - 02.07.2015
Financial Services eBulletin - 2 July 2015
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 16 June 2015, the Law Council of Australia released its submission to Her Majesty's Revenue and Customs seeking clarification on the new requirements for Australian superannuation funds to register as a qualifying recognised overseas pension scheme. The Law Council of Australia has sought confirmation that "a fund will meet the pension age test if the governing rules state that benefits that relate to a UK pension transfer amount can only be paid or commenced to be paid to a member if the member [satisfies relevant conditions of release]".
- On 17 June 2015, Financial sector (Collection of Data) (reporting standard) determination No. 23 of 2015 - SRS 711.0 - SuperStream Benchmarking Measures (dated 10 June 2015) was registered with the Financial Register of Legislative Instruments. The Explanatory Statement states that "the purpose of making this instrument is to introduce a new reporting standard for RSE licensees (SRS 711.0) that will require them to report specific data to APRA, relating to the processing of contribution transactions by a registrable superannuation entity (RSE)." The data under SRS 711.0 will be collected for a four year period from 1 July 2015 and ending on or before 30 June 2019.
- On 23 June 2015, the Federal Court of Australia handed down its decision in Stock (as Executor of the Will of Mandie, Deceased) v N.M. Superannuation Proprietary Limited  FCA 612. The court dismissed an appeal of a decision made by the Superannuation Complaints Tribunal in which it affirmed a trustee's decision to pay death benefits to three adult children of a deceased member of a superannuation fund on the basis that they were dependants. The appellants sought payment of the death benefits as the legal representatives of the deceased's estate. The primary question for appeal was whether the SCT had erred in holding that "a superannuation trustee is in general not to pay to the legal personal representative of a deceased member unless there are no dependants or a binding death benefit nomination in favour of the legal personal representative." In dismissing the appeal, the court found that the SCT did not in fact make that finding; rather, it was found that the SCT held that "it was not unreasonable for the Trustee to follow its general practice in the circumstances of the present case".
- On 25 June 2015, the amending legislation listed below received royal assent:
- Tax and Superannuation Laws Amendment (2015 Measures No 1) Bill 2015 which makes a number of miscellaneous amendments to taxation and superannuation laws;
- Superannuation Guarantee (Administration) Amendment Bill 2015 which removes the obligation for employers to offer a choice of superannuation fund to temporary resident employees or when funds merge; and
- Crimes Legislation Amendment (Penalty Unit) Bill 2015 which increases the Commonwealth penalty unit for criminal offences from $170 to $180 effective from 31 July 2015.
- On 25 June 2015, APRA wrote to all RSE licensees notifying them that of the 26 reporting standards released on 28 April 2015, 7 have been updated after receiving feedback and the other 19 have remained unchanged. Although some updates simply rectify typographical errors, reporting standards to which material amendments have been made include:
- Reporting Standard SRS001.0 Profile Structure (Baseline) which makes clear that data required under the standard must be submitted on an ad hoc basis;
- Reporting Standard SRS700.0 Product Dashboard clarifies that information reported under the standard is reported on the same basis as information required to be disclosed in product disclosure statements; and
- Reporting Standard SRS 710.0 Conditions of Release further clarifies the reporting of unrestricted non-preserved pension benefits.
- On 26 June 2015, the Treasury announced the release of exposure draft legislation to "improve governance in superannuation" for public consultation. The draft regulation and explanatory guide were also released. The proposed amendments include a new requirement for all APRA-regulated superannuation funds to have an independent chair and at least one-third 'independent' directors on their trustee boards. The term 'independent' has been defined as a person who:
- does not have a substantial holding (within the meaning of the Corporations Act 2001) in the RSE licensee;
- does not have a material relationship with, and is not employed by an entity that has a material relationship with, the RSE licensee; and
- has not at any time in the last 3 years been an executive officer or director of a body corporate that has, or has at any time in the last 3 years had, a material relationship with the RSE licensee
Trustees without a majority of independent directors must report on an 'if not, why not' basis. Whilst there will be a 3 year transition period for existing funds to comply, any funds established after 1 July 2016 will have to comply with the changes immediately. The proposed new rules will not apply to SMSFs. The closing date for submissions to Treasury is 23 July 2015.
- On 26 June 2015, APRA wrote to all RSE licensees seeking input on proposed changes to APRA's Prudential Standards. The changes are in support of the exposure draft legislation released by Treasury which propose to improve governance in superannuation. APRA proposes to amend Prudential Standard SPS 510 Governance and introduce a new Prudential Standard SPS512 Governance Transition to complement the proposed legislation. Drafts are expected to be released in late 2015 and to take effect on 1 July 2016.
- On 29 June 2015, the Corporations Amendment (Financial Advice) Regulation 2015 was registered. The Explanatory Statement provides that the regulation is intended to "reduce compliance costs for small business, financial advisers and the broader financial services industry". Amongst other things, the regulation clarifies that advice to employers about default superannuation funds amounts to the provision of a financial service to a retail client.
- On 29 June 2015, the Tax and Superannuation Laws Amendment (Terminal Medical Conditions) Regulation 2015 was registered. The Explanatory Statement provides that the regulation extends the maximum certification period for a terminal medical condition from 12 to 24 months in order to allow earlier release benefits of superannuation benefits. The changes commence 1 July 2015.
- On 29 June 2015, the Corporations (Fees) Amendment Regulation 2015 (No 1) was registered. The Explanatory Statement provides that the regulation amends the fee amounts, and the billing period for which the fees apply, to allow ASIC to charge fees for its market supervision functions for the period 1 July 2015 and 30 June 2016.
- On 29 June 2015, the Assistant Treasurer Josh Frydenberg announced an amendment to the income tax law to extend the existing MySuper tax relief to all transfers of account balances to MySuper products. Currently, the tax relief covers transfers to different superannuation funds, but not transfers within the same fund structure. SMSFs are excluded from the relief, as the MySuper requirements do not apply to them.
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.