Welcome to the latest issue of the KHQ Super Alert. The long-awaited final report of the Retirement Income Review was published this week by Treasury. ASIC also released a consultation paper seeking industry feedback on affordable advice options for consumers, and a report in relation to insurance in superannuation.
Retirement Income Review – Final report released
On 20 November 2020, Treasury released the final report into the Retirement Income Review. In an associated media release, the Treasurer announced that ‘a number of key observations with respect to each of the [superannuation] system’s three pillars’ was made by the report, including:
- ‘the Age Pension, compulsory superannuation and voluntary savings results in most Australians achieving adequate retirement outcomes’;
- ‘superannuation assists middle income earners to smooth their income over their lives. Without compulsory superannuation, middle income earners would not save enough for retirement’;
- ‘more efficient use of savings in retirement can have a bigger impact on improving retirement income than increasing [SG]’;
- ‘the weight of evidence suggests an increase in the SG rate will result in lower wages growth, impacting standards of living’; and
- ‘the Government’s early release policy, enabling Australians to access up to $20,000 of their superannuation across two years, has cushioned the economic impact of COVID-19’.
Click here and here for details.
ASIC – Report in relation to insurance in super
On 20 November 2020, ASIC released report 673 titled ‘Consumer engagement in insurance in super’. The report was based on research by an external consultant which sought to understand what members who engage with their insurance in super want to achieve, and whether they succeed or not. The research found that:
- a third of respondents felt ‘confused, overwhelmed, or uncertain about their interaction [with the fund]. They found insurance complex and difficult’;
- ‘many of the problems experienced by members could probably have been avoided if the member had known where to find the information that they needed on the website, and if it was easy to understand’;
- potential improvements include:
- ‘helping members understand…the differences between the insurance products on offer…[and] the differences between insurance inside and outside super’;
- ‘calculators on all super fund websites would help people work out how much cover they need and how much it would cost’;
- ‘case studies on websites’; and
- ‘reminders to check insurance cover when starting a new fund or changing jobs, or when life stages change’.
Click here for details.
APRA – Speech by APRA Chair
On 18 November 2020, APRA published a speech delivered by its Chair, Wayne Byrnes. Titled ‘unfinished business’, Mr Byrnes explained the ‘first cabs off the rank’ in relation to APRA’s policy agenda following the suspension of its activities due to COVID. These were:
- CPS 511 – APRA has ‘released a package of measures that hold firm to [its] original objectives…that will deliver a meaningful improvement to remuneration practices compared to years gone by’, and in relation to the ‘most contentious aspects’ such as ‘a limit on the use of financial performance metrics in determining variable remuneration’, APRA has ‘accepted the argument that hard-coding a 50 per cent cap into the standard would effectively lock entities into a ‘scorecard’ methodology, [and] would discourage consideration of other remuneration tools’; and
- Superannuation Data Transformation Project – which ‘at first glance may be seen as simply a technical data collection exercise is, at its heart, a far more ambitious project to use data to drive better industry practices and improve member outcomes’. The ‘data collections are also needed to underpin some of the Government’s Your Future, Your Super reforms’.
Click here for details.
ASIC – Consultation paper for affordable advice
On 17 November 2020, ASIC released ‘Consultation Paper 332 Promoting access to affordable advice for consumers’ for public consultation. According to ASIC, the purpose of the consultation paper is to help ASIC understand:
- ‘the issues and impediments relating to the supply of good quality affordable personal advice’; and
- ‘the practical steps that can be taken by ASIC and industry to improve consumer access to good quality affordable advice’.
ASIC is particularly interested in industry feedback about ‘providing limited, digital and strategic advice’ and how to make the example statements of advice in RG 244 ‘more helpful’.
Submissions close on 18 January 2021.
Click here for details.
Parliament – Bill to amend AML/CTF Act progresses to Senate
On 12 November 2020, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019 moved to the Senate after being passed by the House of Representatives on 11 November 2020 (it had been there since October 2019). According to the Explanatory Memorandum, the Bill proposes, amongst other things, to amend the AML/CTF Act to:
- ‘expand the circumstances in which reporting entities may rely on customer identification and verification procedures undertaken by a third party’;
- ‘explicitly prohibit reporting entities from providing a designated service if customer identification procedures cannot be performed’; and
- ‘expand exceptions to the prohibition on tipping off to permit reporting entities to share suspicious matter reports (SMRs) and related information with external auditors and designated business groups’.
Click here for details.
