AIST POLICY UPDATE 29 July 2020 SPEAKER: David Haynes, Senior - - PowerPoint PPT Presentation

29 July 2020 SPEAKER: David Haynes, Senior Policy Manager, AIST

AIST POLICY UPDATE

Policy Update

AGENDA

CoVid measures Policy landscape Retirement Income Review Royal Commission legislation Regulator update Joint letter APRA/ASIC Insurance in Super Code

Policy Update

Reduced minimum drawdown rate for account based pensions by 50% for 2019-20 & 2020-21 (eg, 4% to 2%) New compassionate ground for early release (ERS):

• Up to $10k before 30 June
• Up to $10k from 1 July to 31 December*

Temporary visa holders – $10k before 30 June only *Extension from 24 September announced in JEFU 23 July

COVID MEASURES

Policy Update

AIST animation to assist members to understand early release of super

AUSTRAC – ATO ID process will meet KYC

ERS - ANIMATION

Policy Update Bank account details provided to ATO – not verified

Amount requested may be more than held in account – cannot reapply

Policy Update Bank account details provided to ATO – not verified

Amount requested may be more than held in account – cannot reapply

ERS – APRA STATISTICS

Policy Update Bank account details provided to ATO – not verified

Amount requested may be more than held in account – cannot reapply

ERS – FRAUD ISSUES

Policy Update

If trustee relies on ID and/or bank account details provided by member via ATO and details are incorrect/fraudulent – is the trustee liable to make good member account?

ERS – LIABILITY ISSUE

Policy Update

Targeted measures to improve retirement outcomes for cohorts with low retirement income outcomes (e.g. women, low-income earners and Indigenous Australians) The purpose of superannuation within the retirement income system is to provide adequate income to ensure all Australians achieve a dignified and financially secure standard of living in retirement, supplementing or substituting the Age Pension Strengthen protections for those not actively involved in superannuation and retirement planning, while providing options for those who are

Focus on presenting member voice Report given to Govt 24 July 2020 RETIREMENT INCOME REVIEW – THE AIST VIEW Adequacy Fa Fairness Member protection

Policy Update

Royal Commission legislsation

• Adjustment of APRA and ASIC’s roles in super & principles to co-regulate (3.8, 6.3,6.4, 6.5)
• Renewal and payment of advice, disclosure of lack of independence (2.1, 2.2)

Advice charging regime (3.2 & 3.3) Enforceable codes (1.15) Anti-hawking measures (3.4) No other role

• r office for

trustees of RSE’s (3.1)

Proposed to be introduced by Dec 2020

Policy Update

Royal Commission response

Proposed to be introduced by 30 June 2021 New disciplinary system for advisers (2.10) BEAR to RSE licensees (FAR) (3.9) Compensation scheme of last resort (7.1)

Policy Update

Heatmaps

Updated fees & costs data - June 2020

Super Data Transformation

One year deferral to Sept 2021

Review of Prudential Standards Member Outcomes

Business Process Review & Trial Assessments

REGULATORS – APRA

Policy Update

Design and Distribution Obligations (DDO) RG 97 Enforceable codes Anti-hawking Close and continuous monitoring REGULATORS – ASIC

Policy Update

Should ensure valuation of unlisted and illiquid assets remain appropriate and whether they need to be revalued

Scenarios should reflect:

• Changes in future net

cash flows

• Member behavior
• Market conditions

Stress testing Heightened attention on Assess impact on

• Increased member

switching

• Any deterioration in

liquidity profile of investments Take appropriate action to address Liabilities and contractual commitments such as:

• Currency hedging programs
• Securities lending

Liquidity

JOINT LETTER APRA/ASIC – 1 APRIL

Policy Update

JOINT LETTER APRA/ASIC – 1 APRIL

Insurance in super - Crucial that there is awareness of the cover provided through super. To promote this trustees should:

Understand how members’ insurance may be affected by economic conditions and public health restrictions , e.g.

• policy clauses

relating to employment, work hours, and

• exclusions (such as

pandemic clauses)

Impact of reduction in account balances due to:

• market downturns

and

• early release

Communicate these impacts to members:

• Clearly and

accurately

• In a balanced

manner Work with insurers to assist members who may face additional challenges in making a claim, e.g.

• Obtaining medical

appointments

• Providing evidence
• f disability

Policy Update

INSURANCE IN SUPER CODE UPDATE

• Industry-wide full implementation date of 30 June 2021 maintained
• Some earlier transition dates delayed by some funds
• Improving outcomes for vulnerable members
• Moving to a binding & enforceable code

Lifting standards & implementation continuing priority

Policy Update

INSURANCE IN SUPER CODE UPDATE

Other Government changes also likely to require Code changes

• APRA SPS 250 changes & ASIC REPs 591 & 533
• Claims handling as financial service
• Universal terms

New version of code aligned with PYS & PMIF:

• Restarting of cover clauses
• Affordability provisions (1% cap) under pressure
• Laws to make parts of industry codes legally enforceable

Policy Update Passed 14 May - Permanent CGT relief for merging funds

Bill Summary Anticipated start date

Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 Bill partially implements the improved flexibility for older Australians measures announced in the 2019-2020 Budget. Specifically, the Bill extends the bring forward rule by enabling individuals aged 65 and 66 to make up to three years of non-concessional contributions under the bring forward rule. STILL AWAITING PASSAGE Was to be from 1 July 2020… Levy Imposition Amendment Bills & APRA Industry Funding Bill Makes amendments to respective Levy Imposition Acts to increase the statutory upper limit

• n the amount of levies

PASSED & HAS ROYAL ASSENT 1 July 2020 Treasury Laws Amendment (2020 Measures No. 2) Bill 2020 Miscellaneous: including entities to be deductible gift recipients under income tax law, including Superannuation Consumers’ Centre Ltd. STILL AWAITING PASSAGE Was to be from 1 July 2020…

LEGISLATION