Super Alert – 19 July 2019

This week’s Super Alert notes a number of releases and publications from regulators, and also notes the capability review report of APRA which contains some points of direct interest for the superannuation industry.

APRA updates MySuper authorisation application form

On 12 July 2019, APRA released an updated application form for MySuper authorisation which is required under section 29S of the SIS Act.

According to APRA, the key updates relate to:

• “the new covenants…which require registrable superannuation entity (RSE) licensees to undertake annual outcomes assessments, and which specifically include MySuper products”;
• “the new test in s. 29T(1) of the SIS Act, which states that APRA must have “no reason to believe” that the RSE licensee may fail to comply with the enhanced trustee obligations, the fees rules and the general fees rules in relation to MySuper products”; and
• “a new section seeking information from previous applicants, or applicants seeking authority to offer an existing product, on their breach history and/or the existence of any adverse findings against them”.

​Please click here to read more.

APRA application form for RSE change of control released

On 15 July 2019, APRA published the finalised application form and instruction guide to be used by any person “seeking to obtain a controlling interest (15% or more) in a registrable superannuation entity (RSE) licensee”. As referred to in our Super Alert of 28 June 2019, APRA approval is now required as a result of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019.

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ATO releases performance report for APRA-regulated funds

On 17 July 2019, the ATO released its industry report into large superannuation funds to assist trustees to “understand their performance [in meeting super reporting obligations to the ATO] relative to industry peers”.

According to the ATO, “[t]he high level results show us that 99% of funds were rated as having a good standard of reporting, which is the same as last year. Fifty per cent of funds have either maintained or improved their results. And for the fourth year in a row, no funds are classified as higher risk”.

The ATO has advised that with “the shift from an annual member contributions reporting system to event based reporting”, the ATO will continue to support funds to meet their Member Account Attribute Service (MAAS) and Member Account Transaction Service (MATS) obligations.

Please click here and click here to read more.

ATO draft guide in relation to pension tax bonuses

On 17 July 2019, the ATO issued draft practical compliance guide PCG 2019/D2 which relates to the “compliance approach for large APRA-regulated superannuation funds in respect of pension tax bonuses not included in members’ opening account balances on commencement of a pension”.

The ATO is accepting submissions in relation to the guide until 14 August 2019. Once finalised, it will apply from 1 July 2017 to 30 June 2020.

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APRA Capability Review Report

On 17 July 2019, Treasury released the “Capability Review of the Australian Prudential Regulation Authority (APRA) Report”, prepared by a panel comprising Graeme Samuel, Diane Smith-Gander and Grant Spencer.

The report contains 24 recommendations, including the following of direct relevance to APRA’s role in relation to the superannuation industry:

• “APRA should revise its organisational structure to reinforce the impact of the leadership and cultural changes…along industry lines – banking, insurance and superannuation”;
• “As part of its work to revise its supervisory and policy frameworks, APRA should…embed the recent entity self-assessment process into its more intense supervision of [governance, culture and accountability] risks by making it a biennial requirement. The self-assessments should be more prescriptive than APRA’s recent program…[and along with] APRA’s assessment of each of them, APRA’s thematic reviews and any rectification requirements imposed by APRA in response to a self-assessment should be published”;
• “The Government should consider providing APRA with a non-objections power to veto the appointment or reappointment of directors and senior executives of regulated entities. This would bring it into line with international regulators and strengthen its capacity to pre-emptively regulate [governance, culture and accountability] risks. The power should be available to APRA only where the risks associated with the entity, including but not limited to member outcomes for superannuation funds, warrant it”;
• “APRA should create a new Superannuation Division…[a] key focus of the Division should be overall performance of the superannuation system for members”;
• “[T]he Government should legislate to make APRA’s member outcomes mandate more explicit”; and
• “APRA should take a more strategic, active and forceful approach in its public communications [and]…be more transparent in relation to superannuation, including by publishing objective benchmarks for superannuation performance on member outcomes and a strategy to promote long-term industry performance”.

Please click here to read more.

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