Superannuation Alert - 8.10.14

Financial Services eBulletin - 8 October 2014

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

According to Report 411, of the 803 applications for relief received in the period 1 February - 31 May 2014, 650 were granted, 32 were refused, 57 were withdrawn and the remaining applications were decided outside of this period. The report is intended as a demonstration of how ASIC has applied its policy in practice.

  • On 25 September, the Australian Transaction Reports and Analysis Centre (AUSTRAC) released ASIC Industry Contribution: Second stakeholder consultation paper on the proposed model for the AUSTRAC industry contribution, including a draft Ministerial Determination. The paper is seeking views from stakeholders on the proposed final form of the calculation model.

    Submissions are due by 24 October 2014.
  • On 26 September, the Full Federal Court handed down its decision in Windoval Pty Limited (Trustee) v Donnelly (Trustee), in the Matter of Donnelly (Trustee) [2014] FCAFC 127. The Full Federal Court refused to order a retrial in relation to a court declaration that allowed a bankruptcy trustee to claw-back a retired tax lawyer's $5m gift to his family trust. The bankrupt had made $5m in contributions to a non-complying superannuation fund during the 1998-99 tax year, relying on a private ruling from the Tax Office to claim a deduction on these superannuation contributions. The contributions were comprised of fees earned from his tax advice business. Upon deciding to retire, the bankrupt wound up the superannuation fund and transferred the $5m to the trustee of his family trust. The Court held that the transfer of the gift was void, having been made in order to defeat impending tax liability.
  • On 30 September, an exposure draft of the Tax and Superannuation Laws Amendment Bill: miscellaneous amendments was released. The exposure draft proposes to make minor and technical amendments to various taxation and superannuation laws, including removing errors, updating cross-referencing, repealing subsections which no longer have effect, and updating lists with new information.

    Submissions are due by 22 October 2014 and are preferred in online format.
  • On 2 October 2014, the following Bills were introduced in the House of Representatives. The Bills appear to contain amendments previously introduced in the Social Services and Other Legislation Amendment (2014 Budget Measures No 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No 2) Bill 2014 (both of which are before the Senate). Presumably, the Government does not intend to proceed with those Bills.
    • Social Services and Other Legislation Amendment (2014 Budget Measures No 4) Bill 2014 reintroduces several measures previously introduced in the Social Services and Other Legislation Amendment (2014 Budget Measures No 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No 2) Bill 2014. For example, maintaining the current levels of the income free areas for all working age allowances and several family tax benefit free areas for 3 years from 1 July 2015.
    • Social Services and Other Legislation Amendment (2014 Budget Measures No 5) Bill 2014 reintroduces several 2014 Budget measures. For example, maintaining the current income test free areas for all pensions (other than Parenting Payment single) and the deeming thresholds for all income support payments for 3 years from 1 July 2017.
    • Social Services and Other Legislation Amendment (2014 Budget Measures No 6) Bill 2014 reintroduces several measures previously introduced in the Social Services and Other Legislation Amendment (2014 Budget Measures No 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No 2) Bill 2014. For example, including untaxed superannuation income in the assessment for the Commonwealth Seniors Health Card (with products purchased before 1 January 2015 by existing cardholders exempt from the proposed new arrangements). This Bill was passed by the House of Representatives on 2 October 2014 without amendment and has now moved to the Senate.
    • Social Services and Other Legislation Amendment (Seniors Supplement Cessation) Bill 2014 reintroduces a measure, originally introduced as Schedule 1 to the Social Services and Other Legislation Amendment (2014 Budget Measures No 1) Bill 2014, whereby payment of the seniors supplement for holders of the Commonwealth Seniors Health Card or Veterans' Affairs Gold Card would cease from 20 September 2014.
  • On 1 October 2014, APRA updated its Frequently Asked Questions (FAQs) on the reporting framework for RSEs to include the following new FAQs:
    • FAQ 117: Does APRA intend to change the asset class information required under the 500 series of reporting forms?;
    • FAQ 118: How should an RSE licensee split dollar value and percentage value fees, costs and taxes when reporting on Reporting Form SRF 702.0 Investment Performance (SRF 702.0)?;
    • FAQ 119: What process is involved when an RSE, defined benefit RSE, PST, ERF, SAF or SMADF is winding up, and which forms are required to be submitted as part of the wind-up return?;
    • FAQ 120: Where an RSE licensee changes the information disclosed in a MySuper product dashboard, is the RSE licensee required to submit a new, ad-hoc Superannuation Reporting Form SRF 700.0 Product Dashboard (SRF 700.0) return to APRA, or is the RSE licensee required to resubmit an existing version of SRF 700.0?;
    • FAQ 121: Where an RSE licensee changes the fees and costs disclosed in a Product Disclosure Statement (PDS) relating to a MySuper product, is the RSE licensee required to submit a new, ad-hoc Superannuation Reporting Form SRF 703.0 Fees Disclosed (SRF 703.0) return to APRA, or is the RSE licensee required to resubmit an existing version of SRF 703.0?; and
    • FAQ 122: What is the difference between fees, costs and expenses within the APRA reporting forms?

APRA has also updated FAQ 97: How should an RSE licensee incorporate derivative exposures when reporting directly held and indirectly held investments on Reporting Form SRF 533.0 Asset Allocation (SRF 533.0)?

  • On 1 October 2014, APRA issued a letter to all registrable superannuation entity (RSE) licensees regarding the risk management declaration required under Prudential Standard SPS 220 - Risk Management (July 2013) (SPS 220).

    APRA advises that "[g]iven APRA's general approach towards cross-industry harmonisation of prudential requirements where appropriate, and the recent feedback provided by industry, APRA's view is that it is appropriate to include the concept of materiality for the risk management declaration required under SPS 220". This brings SPS 220 into alignment with the requirements applicable to authorised deposit-taking institutions, general insurers and life companies under Prudential Standard - CPS 220 Risk Management (January 2015).

    A revised version of the risk management declaration incorporating this change is attached to the letter.
    • "implement improvements to the Quarterly Superannuation Performance Statistics publication and Quarterly MySuper Statistics report with amendments to include ... more than 120 new statistics and ... statistics for the first time on MySuper products";
    • "use a new data dissemination tool to publicly release superannuation statistics which will enable enhanced access to data in a manner that facilitates manipulation, visualisation and analysis";
    • "continue to release the interim Quarterly Superannuation Performance Statistics ... until the full version is available via the data dissemination tool ... [as well as] interim versions of the Quarterly MySuper Statistics report pending the implementation of the data dissemination tool"; and
    • consult further on issues relating to the segmentation of data.

In relation to the confidentiality of data, APRA "proposes a phased approach to the determination of data to be non-confidential and hence the publication of non-confidential data", whereby APRA will publish data on MySuper fees, costs and net returns, as well as "additional MySuper product and institution-level data where RSE licensees and representative associations [raise] no objection to a non-confidentiality determination". APRA also intends to undertake further consultation with industry representatives and other interested parties on other superannuation data not included in this determination.

Further information from APRA can be accessed here.

  • On 1 October, the Australian Tax Office (ATO) published the webpage Testing requirements for APRA funds, advising that testing requirements for APRA funds participating in the accelerated induction process for SuperStream have been updated.
  • On 2 October, APRA released the first editions of the interim Quarterly MySuper statistics for the quarters ending September 2013, December 2013, March 2014 and June 2014. The publications contain certain MySuper data, on a product by product basis, pursuant to APRA's obligation to publish under section 348A of the Superannuation Industry (Supervision) Act 1993. According to APRA, "[a]s at 30 June 2014, 93 [RSE] licensees offered a total of 116 MySuper products, and total assets held in MySuper products were $363.2 billion, representing 32% of total RSE assets".

    These publications are accompanied by ARPA's MySuper Statistics Selected Feature (2 October 2014) for the June 2014 quarter edition, which "provides an overview of key features of MySuper products, including return target, level of investment risk, fees and costs, assets and investments by asset class".

 

Further information

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.

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