Publications

Super Alert – 7 December 2018

Welcome to HWL Ebsworth’s first weekly edition of our Super Alert e’newsletter. We trust that you will enjoy this week’s edition.

Treasury consultation paper available: Early release of super benefits on compassionate grounds

On 21 November 2018, the Treasury released for public consultation a further “issues paper with findings and draft proposals for reform of the rules governing the early release of superannuation benefits on compassionate and severe financial hardship grounds”.

The Treasury is primarily seeking public views on:

  • “draft proposals that would relax aspects of the current early release regime and provide more scope for individuals to obtain early release of their superannuation”;
  • “draft proposals to strengthen the integrity of the current arrangements and ensure that superannuation is accessed as a last resort in cases of hardship”; and
  • “proposed changes to the administration of the rules governing early release on compassionate and severe financial hardship grounds”.

Submissions to the issues paper are due on 15 February 2019.

Please click here to read more.

Bill introduced for Age Pension means testing of new lifetime income streams

On 29 November 2018, the Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018 (Bill) was introduced to the House of Representatives.

According to the  Explanatory Memorandum, the Bill proposes to:

  • Establish “new means test rules to accommodate the development of new innovative income streams”;
  • Amend “the current rules for lifetime income streams to create fairer, more equitable means test outcomes”; and
  • Expand the Pension Loans Scheme to provide more Australians with access to the Scheme.

Please click here to read more.

Bill for Superannuation Guarantee Integrity Package passes Senate

On 5 December 2018, the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 (Bill) was passed by the Senate with minor amendments and is now before the House of Representatives.

According to the Explanatory Memorandum, the purpose of the Bill is to amend various taxation laws in order to allow:

  • The ATO “in cases where employers fail to comply with their superannuation guarantee obligations, to issue directions to pay unpaid superannuation guarantee and undertake superannuation guarantee education courses”;
  • The ATO “to disclose more information about superannuation guarantee non-compliance to affected employees”; and
  • “the sharing and verification of tax file numbers, which have been obtained in accordance with a Commonwealth law, between [the ATO] and Commonwealth Agencies”.

Please click here to read more.

Release of APRA superannuation statistics

On 27 November 2018, APRA released its superannuation statistics for September 2018. According to APRA, “there was an increase of 1.5 per cent in total superannuation assets [over the September 2018 quarter]”. Total superannuation assets were reported at $2.8 trillion. The total number of APRA regulated superannuation funds was 2,215 (compared with 2,208 at the same time last year).

Please click here to read more.

Productivity Commission’s issues paper: Economies of scale in superannuation

In November 2018, the Productivity Commission released a supplementary paper in relation to its work in assessing the efficiency and competitiveness of Australia’s superannuation industry.

Titled Economies of scale, the issues paper suggests that “evidence of economies of scale in the superannuation system is compelling”, however;

  • “large cost savings can still be realised, especially from further consolidation. For example, the Commission has (conservatively) estimated that annual cost savings of at least $1.8 billion could be realised if the 50 highest cost funds merged with the 10 lowest cost funds”;
  • “even modest economies can materially reduce costs. A one basis point reduction in administration expense ratios for funds with more than $10 billion in assets would result in annual savings of around $130 million”;
  • “there is little evidence that scale benefits have been systematically passed through to members in the form of lower fees (albeit this finding is based on analysis of only 70 per cent of the system)”; and
  • “scale benefits may also have been ‘passed through’ in the form of member services, increases in reserves or the costs of new regulatory requirements but this cannot be tested nor established due to data constraints”.

Please click here to read more.

Federal Court decision in relation to appeal of SCT’s TPD decision

On 30 November 2018, the Federal Court of Australia handed down its decision in Macras v Nulis Nominees (Australia) Limited [2018] FCA 1867, an appeal from the Superannuation Complaints Tribunal (SCT) in relation to a claim for a total and permanent disablement benefit under a group life insurance policy.

The SCT had earlier affirmed both the trustee’s and insurer’s decision in relation to this claim and the Federal Court upheld this decision. According to Justice Davies, “[c]entral to the contentions advanced by [the applicant] in support of his appeal was his claim that he had made full disclosure of pre-existing conditions and the insurer had all the information it required to be satisfied of his entitlement to be paid benefits under the policy. The [SCT] correctly stated, however, that the issue was not what decision the [SCT] would have made on the material which the trustee and the insurer had but whether the decisions were fair and reasonable”.

Please click here to read more.

Federal Court decision in relation to meaning of “interdependency relationship”

On 4 December 2018, the Full Court of the Federal Court of Australia handed down its judgment in Williams v IS Industry Fund Pty Ltd [2018] FCAFC 219. This case related to a trustee’s decision to pay the whole of a member’s death benefit to the legal personal representative instead of to the applicant himself (the applicant was the deceased member’s father).

The Court dismissed the appeal and upheld the SCT’s original decision to affirm the trustee’s resolution to pay the death benefit to the legal personal representative.The appeal was dismissed on the basis that the applicant did not have an “interdependency relationship” with his son based on the definition in section 10A of the SIS Act (subject to the matters in regulation 1.04AAA of the SIS Regs).The Court agreed with the SCT that the applicant had a close personal relationship with his son but this was not sufficient because at no point were they living together permanently.

Please click here to read more.

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

Natalie Cambrell

P: +61 3 8644 3754

E: ncambrell@hwle.com.au

Damian Tarulli

P: +61 7 3169 4832

E: dtarulli@hwle.com.au

Important Disclaimer: The material contained in this publication is of a general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this publication we recommend that you seek professional advice.