Welcome and introductions
Australian Taxation Office (ATO) Co-Chair Emma Rosenzweig welcomed members, opening the meeting with an Acknowledgment of Country.
The group welcomed incoming members Andre Moore and Shibani Iyer from Treasury, and James Koval from the Association of Super Funds Australia (ASFA). Departing members Lynn Kelly and Luke Spear (Treasury), and Larissa Evans (ATO) were thanked for their valuable contributions to the Superannuation Industry Stewardship Group (SISG).
Superannuation regulators
Treasury
The government is continuing to consider Payday Super. An announcement is expected in the coming months, with the measure scheduled to commence 1 July 2026. The ATO and Treasury are working together to ensure the solution meets the intent of the measure, to reduce the super guarantee gap.
Member services continue to be an area of focus for government, with industry put on notice that super member services are not meeting community expectations. Treasury understands industry has been discussing common service standards.
Other items of interest included:
- Consultation on Better Targeted Super Concessions draft regulations (Division 296) closed on 26 April 2024. Feedback is being reviewed.
- Consultation on amendments to the transfer balance credit provisions for successor fund transfers closed on 24 April 2024. The draft legislation would amend the transfer balance credit provisions so that the credit and debit arising due to a successor fund transfer for individuals with a capped defined benefit income stream are equal.
- A new measure involving super payments on Paid Parental Leave for babies born on or after 1 July 2025 will reduce the impact of career breaks on the parents of small children. Services Australia will support the measure.
- Consultation on the annual superannuation performance test design options has concluded. SubmissionsExternal Link can be viewed via the Treasury website. All feedback will be considered before any adjustments are made to the test, noting any changes should not weaken the test and will continue to ensure the test holds trustees to account for delivering the best financial outcomes for members.
Australian Securities and Investments Commission
ASIC provided an update on recent publications:
- Improving superannuation member services – Dealing with death benefit claimsExternal Link was published on 1 May 2024. The article details initial observations from ASIC's review of industry practices and compliance with laws relating to member services, focusing initially on how trustees handle death benefit claims.
- Exposing high-pressure cold calling tactics and social media click-bait leading to superannuation switchingExternal Link was published on 7 May 2024.
- Report 782 Hardship, hard to get help: Findings and actions to support customers in financial hardshipExternal Link and Report 783 Hardship, hard to get help: Leaders fall short in financial hardship supportExternal Link were released on 20 May 2024. The reports set out the findings of ASIC's review of the end-to-end policies, processes and practices of 10 large lenders in responding to home loan customers experiencing financial hardship.
Other focus areas for ASIC include:
- scam detection and response for non-bank entities, with further communications expected shortly
- continuing greenwashing thematic work, with a focus on enforcing well-established legal obligations that prohibit misleading and deceptive conduct
- better banking for Indigenous consumers
- preparation for the Financial Accountability Regime to apply to super trustees from 15 March 2025.
Australian Prudential Regulation Authority
Key updates from the Australian Prudential Regulation Authority (APRA) included:
- Prudential Standard CPS 230 Operational Risk Management has been finalised. Guidance has been shortened and is more tightly focused on how to meet the expectations set by the standard. The standard takes effect from 1 July 2025.
- APRA is considering stakeholder feedback following consultation on Prudential Standard SPS 515 Strategic Planning and Member Outcomes. The implementation date is expected move to 1 July 2025 to better align with industry planning cycles.
- APRA will publish
- the results of the 2024 annual performance test in late August 2024
- a publication on fund expenditure data in August 2024
- a comprehensive product performance package covering investment returns, fees, and performance test metrics (previously published as heatmaps) in late September 2024.
Australian Financial Complaints Authority
The Australian Financial Complaints Authority (AFCA) continues to receive a high level of super complaints. As at the end of April 2024, 8,028 super complaints had been received. This exceeds the total number of super complaints received in the 2023–24 financial year.
Service quality issues are the key driver of complaints, with broader complaint themes including:
- delays in complaint handling or payments
- account administration errors
- service quality
- failure to follow instructions or agreement
- denial of claim.
The group discussed how the super industry is tracking with death benefit and disability complaints and the issues encountered. Members' comments included:
- Death benefit and disability complaints will become more prevalent due to the aging population.
- Because each case is different, following a standard approach does not always result in a fair outcome and can impose unreasonable demands on a client. For example, funds waiting on a full death certificate containing a cause of death can result in delays and distress.
- There is a big difference between the least and most helpful approaches taken by funds.
- In relation to disability benefits, claims denied based on eligibility criteria are more common, rather than declined applications. An updated life insurance code of practice requires insurers to determine eligibility earlier in the process.
- Resourcing continues to be an issue for funds, as staff may not be experienced in this type of work. Assigning case officers to these sensitive cases could be beneficial to see a client through the entire process.
The ATO noted this is an ongoing issue for the industry and asked members to consider the opportunity for a working group to look at best practice and potential gaps. The Super Members Council of Australia confirmed there is already some work being undertaken on this topic. Conversations will continue out of session, with an update to be provided at the next SISG meeting.
Australian Taxation Office
The ATO shared measures announced in the Budget 2024–25 and other items of interest.
Employment services reform
The ATO will integrate Single Touch Payroll (STP) data into the management and administration of employment. The start date for the measure is 14 May 2024.
Migration systems reform
The ATO will undertake a data sharing pilot for STP data with the Department of Home Affairs. The start date for the measure is 1 July 2024.
Funded Paid Parental Leave – enhancement
The Department of Social Services led measure announced on 7 March 2024 will introduce super guarantee equivalent payment on the government-funded Paid Parental Leave scheme (equivalent to the legislated rate of 12%) for births and adoptions after 1 July 2025.
Non-arm's length expenditure
Members are keen for clarity on the non-arm's length expenditure bill, and the ATO's no compliance action approach per Practical Compliance Guideline PCG 2020/5 Applying the non-arm's length income provisions to 'non arm's length expenditure' – ATO compliance approach for complying superannuation entities. Industry representatives believe the approach should be extended.
Post meeting updates:
- The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 which includes changes to the non-arm’s length expense laws for superannuation entities has received Royal Assent.
- The revised law includes a cap on the amount of income that will constitute non-arm's length income from a non-arm’s length scheme involving general fund expenses; exempts large APRA funds from the provisions; and applies retroactively from 1 July 2018.
- The ATO’s administrative approach in PCG 2020/5 expires on 30 June 2023 and will not be extended given the progress of the new legislation.
First home super saver scheme financial hardship provisions
The first home super saver (FHSS) Scheme financial hardship provisions are different to the severe financial hardship ground of release administered by super funds. The provisions enable individuals who have previously held an interest in property to be eligible for a release under the FHSS scheme if they lose all property interests due to a FHSS hardship event.
FHSS hardship events that could result in the loss of property interests include (but not limited to), bankruptcy, divorce, separation from a de-facto partner, relationship breakdown, loss of employment, illness, or natural disaster. Between 1 July 2018 and 30 June 2023, the ATO received around 1,660 FHSS hardship applications.
For more information, see First home super saver scheme
Recent publications
The SMSF quarterly statistical report March 2024 was published on 22 May 2024.
Environmental scan
Members provided updates on emerging priorities and issues for their market, including:
- recent research showing the number of self-managed super fund (SMSF) trustees obtaining advice from a financial adviser is at an all-time low, highlighting the importance of prospective and existing trustees obtaining proper guidance
- research on how people are spending their money in retirement to determine the appropriate settings for the retirement phase, including minimum drawdown rates
- legislative uncertainty around Division 296, including misconceptions in the market about how the proposal will work
- concerns about the amount of information included in an auditor contravention report and the fear that this can distort the real issues faced by an SMSF
- difficulty recruiting appropriately skilled accounting staff in the superannuation sector
- preparations for the implementation of the Financial Accountability Regime
- implications for financial advisers under the Delivering Better Financial Outcomes Bill 2024
- analysis on the super for housing proposal and who would and would not be supported by the policy
- ongoing work to understand customer service experiences for Indigenous super members.
Fraud and security
The group discussed how regulators and industry are continuing to address fraud and security concerns in the superannuation sector.
General discussion noted:
- increased consistency in incident response activities across the superannuation industry
- that improvements to technology controls can reap significant rewards
- a large reduction in the number of staging accounts created
- that identity theft by a family member remains an issue.
This is an ongoing and evolving piece of work and will be revisited at the next SISG meeting. The IT resilience review by APRA is relevant to this topic, with key observations arising from this work so far including:
- inadequate governance arrangements and board reporting limited the ability of boards to identify significant issues and drive corrective actions pertaining to the security, resilience and recoverability of key systems
- inadequate service provider oversight arrangements
- a lack of technology risk specialist resources across all 3 lines of defence
- insufficient coverage and frequency for the testing of key controls and incident response plans
- inadequate recovery testing programs hindered trustees’ ability to ensure recovery plans were robust and had sufficient coverage of disruption scenarios.
APRA intends to share observations and findings from this thematic review by the end of the calendar year.
ATO Superannuation Public Advice Feedback Forum
The ATO proposed a new SISG working group to seek feedback on ATO public advice and guidance (PAG) on super-specific topics. The group will meet bi-annually to consult on super-related technical issues and will assist the ATO in the formation and prioritisation of PAG products. The group will be led by the ATO.
Members supported the creation of the new working group. The ATO will contact members to discuss next steps.
Compassionate release of super
The compassionate release of super program allows eligible individuals to access their super early in limited circumstances. The limited circumstances (grounds) are to:
- pay for medical treatment and/or medical transport for the person or their dependant
- prevent the foreclosure or forced sale of the person’s home
- modify the person’s home or vehicle to accommodate the special needs arising from their or their dependant's severe disability
- pay for palliative care for the person or their dependant
- pay for expenses associated with the death, funeral, or burial of their dependant.
The group discussed how the process works, eligibility criteria, and the evidence required from medical professionals to support claims. The ATO explained some of the integrity controls in place to support the approval of eligible applications, and action taken in relation to concerning behaviours by third-party intermediaries and providers.
Other key points of discussion included:
- concerns about practitioners who may promote services to ineligible clients, and potential avenues to report suspected misuse of the system
- the importance of individuals understanding the implications of withdrawing money from their super
- whether a cooling off period should apply between the application date and the release of funds, if approved.
For more information, see Access on compassionate grounds.
Attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Emma Rosenzweig (Co-chair), Superannuation and Employer Obligations |
|
ATO |
Alastair Ramsay, Superannuation and Employer Obligations |
|
Actuaries Institute |
Tim Jenkins |
|
Association of Super Funds Australia |
James Koval |
|
Australian Financial Complaints Authority |
Heather Gray |
|
Australian Prudential Regulation Authority |
Chanum Torres |
|
Australian Prudential Regulation Authority |
Sarah Burley |
|
Australian Securities and Investments Commission |
Jessica Spence |
|
Council on the Ageing |
Patricia Sparrow |
|
Chartered Accountants Australia and New Zealand |
Michael Davison |
|
Financial Services Council |
Aidan Johnson |
|
Law Council of Australia |
Tony Nemec |
|
Link Group |
Deborah Schembri |
|
Super Consumers Australia |
Xavier O'Halloran |
|
SMSF Association |
Peter Burgess |
|
Super Members Council of Australia |
Melissa Birks |
|
The Tax Institute |
Liz Westover |
|
Treasury |
Andre Moore |
|
Treasury |
James Thomson |
|
Treasury |
Shibani Iyer |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
David Kasmarik, Public Groups |
|
ATO |
Reece Parry, Superannuation and Employer Obligations |
|
ATO |
Usha Narain, Superannuation and Employer Obligations |
|
Australian Prudential Regulation Authority |
Adrian Rees |
|
Australian Prudential Regulation Authority |
James Douglas |
|
Australian Prudential Regulation Authority |
Sophia Hohnen |
|
Australian Securities and Investments Commission |
Susan Wieczkiewicz |
|
Mercer |
George Takesian |
|
MUFG Retirement Solutions |
Eoin Burke |
Apologies
|
Organisation |
Member |
|---|---|
|
ATO |
Peta Lonergan, Superannuation and Employer Obligations |
|
Australian Prudential Regulation Authority |
Gideon Holland |
|
Australian Prudential Regulation Authority |
Mike Cornwell |
|
Australian Prudential Regulation Authority |
Sarah Nicholson |
|
Australian Securities and Investments Commission |
Jane Eccleston |
|
Business Council of Australia |
Stephen Kircher |
|
Chartered Accountants Australia and New Zealand |
Tony Negline |
|
Financial Services Council |
Spiro Premetis |
|
Mercer |
David Knox (Co-chair) |
|
The Tax Institute |
Phil Broderick |