The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- In December 2016, ASIC released an updated Regulatory Guide 167 - Licensing: Discretionary powers for AFS licensees and financial services providers. Relevantly, the Guide explains:
- ASIC's "approach to applications for relief from compliance with [Parts] 7.6-7.8 (other than [Divisions] 4 and 8 of [Part] 7.6 and [Division] 8 of [Part] 7.8) of the Corporations Act 2001 (Cth) (the Corporations Act)";
- how ASIC uses its powers to "impose AFS licence conditions to support the AFS licensee obligations under the Corporations Act"; and
- ASIC's approach to relief for providers of generic financial calculators.
- On 15 December 2016, ASIC released Regulatory Guide 257: 'Testing fintech products and services without holding an AFS or credit licence' which provides exemptions to some financial technology (fintech) businesses to test certain financial products without being required to hold an AFSL or credit licence. A media release issued by ASIC provides that "ASIC’s fintech licensing exemption allows eligible businesses to test specified services for up to 12 months with up to 100 retail clients, provided they also meet certain consumer protection conditions and notify ASIC before they commence the business."
- On 15 December 2016, ASIC published the ASIC Superannuation (Amendment) Instrument 2016/1232, which defers the superannuation consistency requirements (being the operation of section 29QC of the Superannuation Industry (Supervision) Act 1993) until 2019. ASIC has said that it will issue a further instrument and explanatory guidance about the application of the section in 2018.
- On 15 December 2016, the Government published a discussion paper inviting consultation on the development of a framework for Comprehensive Income Products for Retirement (CIPR). The paper intends to "explore a potential framework for the development and offering of [CIPR]" and specifically seeks feedback on the following areas:
- "the structure and minimum requirements of CIPRs;
- the framework for regulating CIPRs; and
- the offering of a CIPR."
The closing date for submissions is 28 April 2017.
- On 16 December 2016, the Government released for consultation the following draft regulations in support of the superannuation reform package:
- The Government issued a media release explaining that the draft regulations relate to:
- "prescribing the subsidiary objectives of the superannuation system;
- defining total superannuation balances;
- release authorities;
- lowering the annual non-concessional cap;
- improving access to tax deductions for personal contributions; and
- implementing the transfer balance cap."
Submissions on the draft regulations close 10 February 2017.
- On 19 December 2016, ASIC issued a media release explaining that it has extended the time that providers of retirement and superannuation calculators have to comply with the new requirement that generic financial calculators must account for inflation until 1 July 2018. ASIC stated that it has "deferred the commencement of this requirement for superannuation and retirement calculators because there are a number of current superannuation reforms that may impact on how superannuation calculators should present and calculate estimates in the future".
- On 19 December 2016, APRA published APRA Insight Issue Four 2016, which outlines APRA's current key developments and policy initiatives. The paper predominantly covers the outcomes of APRA's 2015 review into liquidity stress testing in the superannuation industry. APRA explains the "review found a variety of practices adopted for liquidity stress testing, with differing degrees of sophistication across the trustees examined as part of the review." The paper concludes that further enhancements to liquidity stress testing in the superannuation industry are needed and that "[l]iquidity stress testing should not be viewed as primarily a compliance exercise; rather such testing should be tailored to reflect the particular features and circumstances of the trustee’s operations and used to enhance investment decision making".
- On 20 December 2016, ASIC published a form and instructions (RG97 Form) for superannuation trustees and responsible entities to provide ASIC with information on updated fee and cost disclosure requirements in relation to product disclosure statements. Issuers seeking to rely on the extension must have advised ASIC by 1 February 2017 stating specific matters. Issuers must provide ASIC with information required by the RG97 Form by 1 March 2017. Superannuation trustees are only required to provide information about their generic MySuper product, their investment option that has the most assets and any other option with more than $100 million in assets at the end of the last financial year. (Further information is available from ASIC here.)
- On 21 December 2016, the ATO released Draft Law Companion Guideline LCG 2016/D12 to provide guidance on how an individual's "total superannuation balance" is to be calculated, a concept introduced by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016. From 30 June 2017, an individual's total superannuation balance must be calculated in accordance with the legislation and Guideline. The ATO has requested public comment on the Guideline by 6 February 2017.
- On 16 January 2017, the ATO released the Draft Law Companion Guideline 2017/D1 - Superannuation reform: defined benefit income streams - pensions or annuities paid from non-commutable, life expectancy or market-linked products for public comment. The Guideline clarifies how the "defined benefit income cap applies to superannuation income stream pensions or annuities that are paid from non-commutable, life expectancy or market-linked products," following changes made to the income tax treatment of certain defined benefit income stream benefits. Comments on the Law Companion Guideline are required by 17 February 2017.
- On 19 January 2017, ASIC released its letter to trustees of superannuation funds with employer subplans reminding them of their obligation to publicly disclose transparency information for those RSE subplans from 1 July 2017. This follows the expiry of the current transitional period on 30 June 2017. While trustees will be required to make all transparency information available, including in relation to subplans, they may still redact information that is personal to a beneficiary or a former beneficiary of the fund.