Super Alert – 1 March 2019

This week’s Super Alert covers a TPD case, the latest APRA superannuation statistics, a directive to ASIC in relation to conflicted remuneration investigations and exposure draft legislation to make technical amendments on some prior superannuation tax reform measures.

TPD case – Plaintiff compelled to attend medical examination

On 20 February 2019, the Supreme Court of NSW handed down the decision of Harrod v MetLife Insurance Limited [2019] NSWSC 28. It concerns a claim by a police officer for an insured benefit through her superannuation fund. Although the plaintiff had discontinued the case against the trustee, she continues to pursue her claim against the insurer. The case concerns the procedural question whether the insurer could compel the individual to attend a medical examination so as to be subject to a psychological assessment. The Court held that it would exercise its discretion pursuant to rule 23.4 of the Uniform Civil Procedure Rules 2005 to order the examination because the plaintiff’s physical and mental condition is in issue.

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APRA releases December 2018 quarterly superannuation statistics

On 26 February 2019, APRA released its Quarterly Superannuation Performance publication and its Quarterly MySuper Statistics report for the December 2018 quarter. It indicates that total superannuation assets are $2.653 trillion, a 3.6% decrease from the previous quarter.

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ASIC directive on grandfathered conflicted remuneration

On 27 February 2019, an instrument was registered concerning a directive to ASIC to investigate grandfathered conflicted remuneration – the Australian Securities and Investments Commission (Investigation into Grandfathered Conflicted Remuneration for Financial Advice) Direction 2019.

It is a directive to ‘investigate the extent to which persons who are giving or accepting grandfathered conflicted remuneration, as at [1 July 2019], are:

• Changing their arrangements to end the payment of grandfathered conflicted remuneration prior to 1 January 2021; and
• Passing the benefit of ending the payment of grandfathered conflicted remuneration on to clients, whether through direct rebates or otherwise’.

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Exposure draft legislation – Treasury Laws Amendment (Miscellaneous Amendments)

On 27 February 2019, Treasury released exposure draft legislation – Treasury Laws Amendment (Miscellaneous Amendments) Bill 2019 – and associated regulations concerning the 2016-17 ‘Budget Superannuation Tax Reform Package’.

The Treasury website release indicates the Assistant Treasurer had announced in October 2018 that some minor technical amendments would be made to superannuation tax legislation and regulations to correct unintended outcomes related to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016. Accordingly, the release explains what the draft Bill and Regulations provide for as follows:

‘The draft legislation contains provisions to:

• Correct an error in the way that market-linked pensions are valued under the transfer balance cap when they are commuted or rolled over, resulting in a nil debit; and
• Ensure that death benefits that include life insurance proceeds are not subject to tax when they are rolled over to a new superannuation fund.’

‘The draft regulations:

• Fix the valuation of defined benefit pensions under the transfer balance cap to reflect when pensions are permanently reduced following an initial higher payment, such as for some public sector defined benefit reversionary pensions;
• Change the definition of life-expectancy period for innovative income stream products to account properly for the number of days in a leap year; and
• Maintain the capped defined benefit treatment of market-linked pensions under the transfer balance cap where they have been rolled over as a result of a successor fund transfer.’

Consultation on the draft package is open until 27 March 2019.

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This article was written by Natalie Cambrell, Partner, Damian Tarulli, Special Counsel and Sanela Osmanovic, Associate.