The highlights of this week’s Super Alert include the new Coronavirus-related legislation for the early release of superannuation and changes to minimum drawdown rates, as well as various announcements from all of the regulators relating to the suspension of their ongoing projects.
Senate Committee report into Your Superannuation, Your Choice Bill
On 20 March 2020, the Senate Economics Legislation Committee released its report in relation to the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. As mentioned in our Super Alert of 6 December 2019, the Bill reintroduces amendments to the Superannuation Guarantee (Administration) Act 1992 (Cth) to ‘ensure employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions’.
The Committee recommended that the Bill be passed and that:
- ‘a review [be] conducted into the effect of this legislation on defined benefit schemes two years after its implementation’; and
- ‘the government considers changes as suggested [in the public submissions] to further improve superannuation arrangements … [such as] amendments which provide greater transparency, [streamline] the decision making process, [help] funds improve performance and … [enable] workers to make more informed choices about superannuation’.
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2020/21 Federal Budget deferred
On 20 March 2020, the Treasurer issued a media release stating that the ‘Government has decided to defer the 2020-21 Budget until 6 October 2020’ so that there is ‘more time for the economic and fiscal impacts of the coronavirus, both in Australia and around the world, to be better understood’.
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APRA suspends 2020 project work
On 23 March 2020, APRA announced that it has suspended ‘all substantive public consultations and actions to finalise revisions to the prudential framework that are currently underway or upcoming, including consultations on prudential and reporting standards’ (as referred to in our Super Alert of 31 January 2020) due to the coronavirus.
According to APRA, it ‘does not plan to recommence consultation on any non-essential matters before 30 September 2020 … [and] is also reconsidering the implementation dates and transition timeframes for prudential and reporting standards that have been recently finalised but not yet implemented’ .
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ASIC changes 2020 regulatory focus
On 23 March 2020, ASIC issued a media release to announce that it ‘will focus its regulatory efforts on challenges created by the COVID-19 pandemic … [or] where there is the risk of significant consumer harm, serious breaches of the law, risks to market integrity and time-critical matters’. However, all other supervisory work will be suspended until 30 September 2020.
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AFCA modifies approach to dispute resolution
On 23 March 2020, AFCA issued a media release stating that it ‘will modify its approach to dispute resolution to take into account all regulatory and legislative changes announced as part of Australia’s COVID-19 response’. For example,
- ‘Complaints about COVID-19 will be prioritised and fast-tracked to ensure those impacted have their issues resolved as quickly as possible’ and
- ‘AFCA will take into account the circumstances and context in which lenders and other financial firms are currently operating when considering complaints.’
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Coronavirus Economic Response Package legislation – early release of superannuation and reducing superannuation minimum drawdown rates
On 24 March 2020, the Coronavirus Economic Response Package Omnibus Bill 2020 received Royal Assent and is now Act no. 22 of 2020. In relation to superannuation, the Act amends the SIS Regulations and RSA Regulations to:
- ‘reduce the minimum payment amounts for account based pensions, allocated pensions (and for the equivalent annuity products) by half for the 2019-20 and 2020-21 financial years’; and
- ‘allow individuals affected by Coronavirus to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds. Each person is permitted to have up to two releases – one for an application made during the 2019-20 financial year and another for an application made during the 2020-21 financial year…[a]ny applications for this release must be made within six months of the amendments commencing’.
The Act also amends the Income Tax (Transitional Provisions) Act 1997 to ensure that any amounts released under these compassionate grounds are not subject to tax.
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APRA temporarily suspends ‘APRA Connect’ data collection solution project
On 24 March 2020, APRA announced ‘the temporary suspension of its program to replace APRA’s Direct to APRA (D2A) data collection tool with APRA Connect’ for at least six months. As mentioned in our Super Alert of 20 March 2020, APRA Connect will be ‘the new data collection solution for reporting entities to lodge entity information and financial data with APRA’.
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ATO website updates – coronavirus measures
On 25 March 2020, the ATO updated its website to include information about the administration of the Coronavirus Economic Response Package Omnibus Act 2020.
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This article was written by Natalie Cambrell, Partner, Sanela Osmanovic, Senior Associate and Joseph Cheung, Solicitor.