The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

This week our alert includes a round-up of the 2018/2019 Federal Budget measures that relate to superannuation.

Type Subject matter Source Description

Federal Budget

2018/2019 Federal Budget

Treasury Budget website

  • Fee cap: a 3 percent annual cap will be introduced on "passive fees" charged by superannuation funds on accounts with balances below $6,000, and a ban on exit fees on all superannuation accounts (date of effect - 1 July 2019);
  • Insurance opt-in: insurance within superannuation will move from a default framework to an 'opt-in basis' for members with account balances of less than $6,000, members under the age of 25 and members whose accounts have not received a contribution in 13 months and are inactive (date of effect - 1 July 2019);
  • Inactive accounts: super funds will be required to transfer all inactive superannuation accounts with balances below $6,000 to the ATO for superannuation consolidation purposes (date of effect - 1 July 2019);
  • Retirement income strategy covenant: the SIS Act will be amended to introduce a retirement covenant which will require trustees to formulate a retirement income strategy for fund members (date of effect is currently unknown, this will be the subject of an upcoming consultation paper);
  • Retirement income product disclosure: the Corporations Act will be amended to require the reporting of simplified, standardised metrics in product disclosure for retirement income products to assist decision making (date of effect is currently unknown, this will be the subject of an upcoming consultation paper);
  • Age 65-74 work test: an exemption from the work test will be introduced for voluntary contributions to superannuation for members aged 65-74 with superannuation balances below $300,000 in the first year that they do not meet the work test requirements (date of effect - 1 July 2019); and
  • Opt-out of multiple superannuation guarantee (SG) contributions: individuals who have multiple employers and income exceeding $263,157 will be able to nominate that their wages from certain employers are not subject to the SG, so that such individuals can avoid unintentionally breaching the $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions (date of effect - 1 July 2018).

Federal Parliament

Financial Complaints Authority update

Media Release

On 1 May 2018, the Minister for Revenue and Financial Services, Kelly O'Dwyer, announced the authorisation of Australian Financial Complaints Limited to "operate the Australian Financial Complaints Authority (AFCA), the new financial dispute resolution scheme". Ms O'Dwyer said, "AFCA will have expertise to deal with all disputes across the entire financial services industry, including superannuation and small business lending disputes” and the new AFCA scheme will "operate under significantly higher monetary limits and compensation caps".

As part of the scheme, all "Australian Financial Services Licensees, Australian Credit Licensees, superannuation trustees and other financial firms required to become members of AFCA by law, and will need to do so by no later than 21 September 2018. AFCA will, in the coming months, outline the process for applying for membership".

AFCA will begin accepting complaints from 1 November 2018.

ATO Addendum to Law Companion Ruling LCR 2016/8

ATO website

On 2 May 2018, the ATO issued an Addendum to Law Companion Ruling LCR 2016/8, making minor amendments and corrections. The Ruling provides guidance on the transitional CGT relief available for trustees of complying superannuation funds and pooled superannuation trusts in relation to the transfer balance cap and transition-to-retirement reforms commencing on 1 July 2017.

ATO Super fund reporting of member account transactions - ATO draft instrument

Draft SPR 2018/D2 - Taxation Administration Member Account Transaction Service - the Reporting of Information Relating to Superannuation Account Transactions 2018

On 3 May 2018, the ATO published Draft SPR 2018/D2 - Taxation Administration Member Account Transaction Service - the Reporting of Information Relating to Superannuation Account Transactions 2018. The instrument applies to "every superannuation provider in relation to a superannuation plan (excluding a self- managed superannuation fund) and every life insurance company that is required to lodge a Member Account Transaction Service (MATS) form".

This instrument will require MATS forms to be lodged to report employer contributions, non-employer transactions, acknowledgement of a valid notice of intent to claim a personal superannuation contribution deduction and retirement phase events, all within 10 business days. Additionally, "member contribution balance amounts [are] required to be reported as at 30 June of a financial year, no later than 31 October following the end of the financial year to which the amount relates".

The instrument commences "on the day after it is registered on the Federal Register of Legislation and will apply from 1 July 2018".

Treasury Release of exposure draft legislation for superannuation budget measures

Protecting Your Super package

On 8 May 2018, the Treasury released for public consultation exposure draft legislation in relation to the Government's "Protecting Your Super" package, as announced in the 2018-19 Federal Budget. These amendments relate to capping fees on certain superannuation accounts, not offering unnecessary insurance, and transferring inactive accounts to the ATO sooner. These changes are "designed to protect Australians’ superannuation savings from undue erosion by fees and insurance premiums".