Superannuation Alert - 15.07.15
Financial Services eBulletin - 15 July 2015
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
On 6 July 2015, the Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2015 (25 June 2015) was registered. According to the Explanatory Statement the Australian Prudential Regulation Authority Act 1998 requires the Minister, by legislative instrument, to make a determination on the amount of levy that is to be available to cover the costs to the Commonwealth of providing market integrity and consumer protection functions for prudentially regulated institutions, administering the function of making determinations about the release of benefits on compassionate grounds and implementing the SuperStream measures. The determination states the amount of levy revenue allocated under each of the various levy imposition Acts relating to ASIC, the ATO, the Department of Human Services, and for the implementation of the SuperStream measures in 2015-16.
On 6 July 2015, APRA released an information paper, Outsourcing Involving Shared Computing Services (Including Cloud) which outlines prudential considerations for APRA regulated entities which are outsourcing through shared computer services including cloud computing services. The paper confirms that superannuation entities undertaking such activities must still comply with Prudential Standard SPS 231 and have their outsourcing policies approved by APRA.
On 7 July 2015, the Productivity Commission released a research paper 'Superannuation Policy for Post-Retirement', which considered how and when people were accessing their superannuation. In particular, the report considers the consequences of lifting the preservation age and the incidence of individuals withdrawing their superannuation benefits as a lump sum.
On 10 July 2015, the ATO posted a series of answers to Frequently Asked Questions regarding the implementation of SuperStream. Relevant information includes:
- Employers must collect additional data to be submitted with employee payroll files including a unique superannuation identifier, bank account details and electronic service addresses; and
- Small employers (19 or fewer employees) have until 30 June 2016 to become SuperStream compliant.
The ATO also issued a reminder on 13 July 2015 that it is offering flexibility and support to employers in an attempt to encourage SuperStream compliance before 30 June 2016.
On 10 July 2015, the Federal Court of Australia handed down its decision in Sherrah v Commonwealth Superannuation Corporation  FCA 698, an appeal from a determination made by the Superannuation Complaints Tribunal. The case concerned a dispute about the interest rate which was applied to a superannuation fund member's withdrawal benefit. Before submitting his application for a withdrawal benefit the member was advised that interest on his benefit would be calculated using the earning rate applicable on the day after he lodged his application, or the date upon which his benefit was paid, whichever was the greater. However, this advice proved to be incorrect, and in calculating the member's benefit, the trustee of the fund applied a negative earning rate between the date the applicant applied for his benefit, and the date upon which the benefit was paid to him, reflecting the negative earnings of the member's investment strategy over the relevant period.
Before the dispute reached the SCT the trustee of the fund made a compromise offer to the member, however declined to recalculate the member's benefit in the way sought by the member (which would have resulted in a significantly higher amount than the amount the trustee offered in compromise) because this was not permitted by the rules of the fund. The SCT concluded that the trustee of the fund had acted fairly and reasonably in compromising the applicant’s complaint by offering a settlement amount, rather than recalculating his benefits in the way sought by the member. The member appealed to the Federal Court, which held that the Court had competency to hear the matter on the basis that the member had raised certain questions of law on appeal (dismissing the application made by the trustee to the contrary) and ultimately upholding the decision of the Tribunal on the basis that no error of law was made in its determination in favour of the trustee.
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.