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

Type Subject matter Source Description

Legislative update

New superannuation legislation

TreasuryLaws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Bill2017

and

FirstHome Super Saver Tax Bill 2017

On 13 December 2017, the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Bill 2017 (Housing Affordability Bill) and the First Home Super Saver Tax Bill 2017 (FHSS Bill) received Royal Assent.

The accepted amendments to the Housing Affordability Bill include:

  • a requirement to undertake a review of amendments to the Bill as soon as practicable 18 months after Royal Assent and be completed within 6 months;
  • provide an exception for the withdrawal from superannuation in the case of financial hardship as determined by the Commissioner; and
  • enable taxpayers to object to a decision of the Commissioner ruling that the taxpayer has not suffered financial hardship.

The FHSS Bill passed all stages without amendment.

Policy update

Australian Financial Complaints Authority

TreasuryLaws Amendment (Putting Consumers First - Establishment of the AustralianFinancial Complaints Authority) Bill 2017

On 6 December 2017, the Senate passed the Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian Financial Complaints Authority) Bill 2017, which, among other things, establishes the Australian Financial Complaints Authority (AFCA), with 20 amendments.

According to the Supplementary Explanatory Memorandum, the amendments include:

  • "an additional mandatory requirement for the operator of the [External Dispute Resolution] scheme so that the operator’s constitution must provide that the operator will have an independent person as the chair of the board";
  • an ability for the AFCA to "issue directions to protect the confidentiality of information in connection with, or as part of the process of, determining a superannuation complaint";
  • an ability for AFCA to "cancel the complainant’s membership in a life policy fund, or in any sub-plan of the fund, if the complaint relates to the complainant being unfairly or unreasonable admitted into the life policy fund";
  • a clarification that "before a person can make a complaint to AFCA about a decision by a death benefit decision-maker relating to the payment of a death benefit, the person must have an interest in the death benefit";
  • in relation to decisions regarding a death benefit, a provision that if the decision-maker gives the person notice of a proposed or final decision, and the notice specified that the person can object or make a complaint to AFCA within 28 days, then the person can only object or make a complaint within that 28 day period; and
  • where a person is not given a notice of the decision-maker's proposed or final decision that specifies the relevant timeframes, "then that person may make a complaint to AFCA at any time".

The Bill is now before the House of Representatives.

Treasury update Review of early access to superannuation

Media release

On 8 December 2017, Kelly O'Dwyer, Minister for Revenue and Financial Services, issued a media release announcing a Treasury review that will consider the rules governing early release of superannuation on grounds of severe financial hardship and compassionate grounds, and the circumstances (if any) superannuation assets should be available to pay compensation or restitution to victims of crime. According to the media release the Government will also transfer the regulatory role of administering the early release of superannuation benefits on compassionate grounds from the Department of Human Services to the Australian Taxation Office. The relevant Treasury report is expected in March 2018.

APRA Consultation package with new prudential standard Media release

On 13 December 2017, APRA released a consultation package on "measures aimed at assisting APRA-regulated superannuation licensees to be better positioned to deliver sound outcomes for their members". The package includes measures which:

  • makes "changes to the existing prudential standard SPS 220 Risk Management relating to strategic and business planning and fund expenditure policies and processes";
  • introduces a "new prudential standard, SPS 225 Outcomes Assessment, requiring all RSE licensees to annually assess the outcomes provided to members using a broader range of measures";
  • introduces "new prudential practice guides to assist RSE licensees with their strategic and business planning and the outcomes assessment"; and
  • amends "SPS 250 to require RSE licensees to provide straight-forward processes for opting-out of all insurance products".

Copies of the publications, including the draft prudential standards, are available at APRA's website.

ATO Departing Australia superannuation payments ATO website

On 11 December 2017, the ATO updated their website regarding super information for temporary residents departing Australia. The website informs workers on temporary visas that they may have earned superannuation while working in Australia, and that they "can apply to have this super paid to [them] as a departing Australia superannuation payment (DASP) after [they] leave".

AIST New industry guidance Fee and cost disclosure guidance

On 24 November 2017, Australian Institute of Superannuation Trustees (AIST) published the RG97 Industry Working Group Fee and Cost Disclosure Guidance (Guidance).

The Guidance states that it is "designed to assist trustees and responsible entities to understand and comply with the amendments to Schedule 10 of the Corporations Regulations 2001 (Cth)", which sets out the fees and costs disclosure regime for superannuation products.

The AIST has also made available fee and cost mapping tables which "provide assistance to funds in understanding what are 'fees and costs', as well as where such fees and costs are to be disclosed".

Case law update Full Federal Court appeal Mercer Superannuation (Australia) Limited v Billinghurst [2017] FCAFC 201

On 7 December 2017, the Full Court of the Federal Court dismissed an appeal by the trustee of a superannuation fund in relation to a decision of the Federal Court which upheld a determination of the Superannuation Complaints Tribunal (Tribunal).

The relevant determination of the Tribunal was that a decision by the trustee to adopt a particular methodology with which to value pensions being paid from an employer-sponsored plan for the purposes of cashing the pensions out upon the plan's termination was not fair and reasonable.

The trustee selected a methodology with which to value the pensions upon the advice of the actuary of the plan and having regard to the employer-sponsor's preferences. The employer requested the trustee prepare calculations for the valuation of the plan pensions for the purposes of converting the pensions to lump sums, and that such calculation should be determined by reference to the cost of each pensioner purchasing an "equivalent annuity" not indexed for inflation. The employer acknowledged that its preferred valuation would result in the employer being required to make an additional contribution to achieve its stated objectives, which the employer committed to make.

The Tribunal found that the trustee's decision to adopt the methodology requested by the employer was not fair and reasonable and this determination was upheld on appeal to the Federal Court. The trustee appealed and the Full Court of the Federal Court by majority (2-1) dismissed the trustee's appeal on the basis that no error of law could be found in the approach of the judge at first instance. The dissenting judge would have allowed the trustee's appeal.