Superannuation Alert - 07.11.13
Financial Services eBulletin - 7 November 2013
Lander & Rogers' Superannuation Alert is a brief overview of new developments in the superannuation industry
On 29 October 2013, APRA released the following new FAQs:
- APRA's expectations regarding RSE licensees engagement with employers on where to pay accrued default amounts in circumstaces where the RSE licensee is the licensee of an RSE that is not seeking MySuper authorisation or is seeking MySuper authorisation but may not have a MySuper authorisation at 1 January 2014 are set out in the following FAQs:
- APRA's expectations regarding liability and indemnity provisions relating to sub-contracting in outsourcing agreements:
- How should RSE licensees address the interaction between the 3-day rollover rule and scheduled processing delays, such as the end of the fund's reporting year? (See SuperStream - FAQ 8).
On 31 October 2013, APRA released its Annual Report for 2012-13.
- In relation to the superannuation industry, APRA said the most significant risk from this environment is that trustees may increase their risk appetite for higher yielding assets. In doing so, APRA said trustees may expose super fund members (in defined contribution schemes) and sponsoring employers (for defined benefit fund schemes) to risks that they may not understand, and that may not be managed appropriately.
- APRA also provided an update on its supervisory efforts in preparation for Stronger Super noting that authorisation of MySuper products has been a major supervisory priority. As at 1 July 2013, the date from which trustees authorised to do so could offer a MySuper product, APRA had received 75 applications and 48 MySuper products had been authorised. By the end of September 2013, a further 27 MySuper products were authorised. APRA has also authorised 2 trustees to offer eligible rollover funds after 1 January 2014.
Treasurer Joe Hockey, Industry Minister Ian Macfarlane and Finance Minister Mathias Cormann have confirmed that the federal government is committed to increasing the super guarantee charge (SGC) from 9% to 12%. However, Industry Super Australia (ISA) has expressed concern about the delay in increasing the SGC to 12%, as well as the federal government's plan to abolish the low income super contribution (LISC). ISA stated that as the LISC mostly benefits women and women currently retire with approximately 43% less in retirement savings than men, it is critical that the federal government retains the tax break. The Financial Services Council (FSC) welcomed the federal government's commitment to raising the SGC to 12%, claiming that its research shows a retirement savings gap of more than $1 trillion, which the SGC will help to close.
- Joint media release (24 October 2013)
- FSC's media release (24 October 2013)
- ISA's media release (25 October 2013)
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