Testmonials

ASIC: Deferral of Stronger Super amendments in relation to PDS and periodic statement disclosure

ASIC has issued ASIC CLASS ORDER [CO 13/1534] to provide interim relief and exemption from compliance with new fee and cost disclosure requirements in product disclosure statements and periodic disclosure statements which were to come into effect from 31 December 2013.

The class order extends the date of compliance from 31 December 2013 to 1 July 2014, consistent with changes applying for the date for managed investment products.

ASIC stated that the purpose of the exemptions was to address compliance and administrative costs and the unreasonable burden imposed on trustees to meet the requirements by 31 December 2013.

An additional exemption has been granted in respect of where a trustee is required to make publicly available a product dashboard for the investment option. This means that the product dashboard would be required to be included as part of a periodic statement, including periodic statements when a member exits the fund. The class order provides interim relief from compliance if a trustee includes in the periodic statement, or accompanies the periodic statement with, a website address for the latest product dashboard for the investment option.

ASIC stated that the purpose of this exemption is to address the compliance and administrative costs and the unreasonable burden imposed on trustees by including hard copies of product dashboards in periodic statements. The exemption will apply to periodic statements given in relation to reporting periods ending before 1 January 2015, to allow for further consideration and consultation with industry.

ASIC issues further super reforms guidance

ASIC has issued further guidance to assist industry with superannuation reforms, as well as a consultation paper about keeping superannuation websites up to date.
The guidance relates to the new product dashboard requirements for MySuper products, and the new fees and costs disclosure requirements for product disclosure statements (PDSs) and periodic statements.

Product dashboard

From 31 December 2013 [Note: now subject to Relief] , trustees will be required to publish and keep up to date, a product dashboard for their new MySuper products. MySuper products are the new default products in superannuation, replacing over time existing default funds. The product dashboards will enable consumers to compare their super with other funds and products.

Information Sheet 170 MySuper product dashboard requirements for superannuation trustees (INFO 170) explains what information must be provided for each of the following measures:

  • The return target
  • The returns for previous financial years
  • A comparison between the return target and returns for previous financial years
  • The level of investment risk, and
  • A statement of fees and other costs.

INFO 170 also contains an example of what the product dashboard may look like, which incorporates some of the feedback from the independent consumer testing conducted by Latitude Insights.

Consultation

ASIC has also released Consultation Paper 219 Keeping superannuation websites up to date (CP 219), which considers what ‘up to date at all times’ means in the context of s29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act). These requirements relate to executive officer remuneration disclosure and other systemic transparency measures.

ASIC proposes giving trustees a ‘safe harbour’, so that they are taken to comply with the updating obligation in s29QB if they update the fund website within a specified time. That time is generally 14 days.

ASIC is seeking feedback by 3 February 2014.

FSC: Asia Pacific is Australia’s biggest source of investment fund flows

The Financial Services Council and The Trust Company have released the second annual “Australian Investment Managers Cross-Border Flows Report” revealing that ASIA Pacific continues to be the biggest source of investment into the Australian managed funds industry.

ASIA now accounts for 66% of all fund flows, followed by Europe (24%). Collectively Europe and ASIA account for 90% of all flows into Australian managed funds. Since 2010 investment flows have increased by 78% from $20.3 billion to $36.2 billion.

John Brogden CEO of FSC said “The report shows the massive potential export market for the Australian financial services sector…… The proportion of funds sourced from overseas has the potential to increase exponentially if the right policy settings are in place.”

CEO of The Trust Company, Shailendra Singh, said “Australian funds management expertise is widely recognised across the region.” He additionally stated that the stability of Australia’s economic and political environment has attracted a large proportion of fund flows from Asia in Australian fixed interest and cash. This asset class comprised 49% of all cross border investment.

“While interest rates in Australia are at an all time low, they are considered to be a good investment as they are comparatively higher than Asia” Mr Singh said.

Superannuation Discussion Paper Released for comment

Assistant Treasurer, Senator the Hon Arthur Sinodinos AO, released a discussion paper entitled ‘Better regulation and governance, enhanced transparency and improved competition in superannuation’ for public consultation. This is to meet the Government’s election commitments to improve governance, increase transparency of information provided by super funds and boost competition and transparency in the selection process of default super funds in modern awards.

 

Good governance in superannuation is critical to securing trust and integrity.  This Government is committed to improving superannuation governance which may be aligned with the corporate governance principles applicable to, for example, ASX-listed companies or APRA-regulated entities, such as in the banking and finance industry,” said Senator Sinodinos.

 

Addressing outstanding aspects of the MySuper reforms, including improving the quality of information available to super fund members, is also key to ensuring both members and employers can make informed decisions about the relative performance of funds.  This is why the issue of transparency will be examined in this paper.

 

Australians in default superannuation funds should benefit from genuine choice and competition through ensuring any MySuper product can compete freely in the default superannuation market.

The paper also seeks views on a possible deferral of the commencement date of the MySuper transparency measures beyond 1 July 2014.

 

We are committed to a detailed consultation process to ensure the interests of consumers are protected, regulatory burden is minimised and confidence is increased in the system,” said Senator Sinodinos.

 

Consultation for this paper will be open from today until 12 February 2014.  The discussion paper can be viewed Treasury website.

APRA releases quarterly superannuation statistics for September 2013

The Australian Prudential Regulation Authority (APRA) released its September 2013 Quarterly Superannuation Performance publication. Total estimated assets, which include the assets of self-managed superannuation funds and the balance of life office statutory funds, rose to $1.75 trillion as at 30 September 2013.

Contributions to funds with at least $50 million in assets over the September 2013 quarter were $21.5 billion. Total contributions for the year ending September 2013 were $90.3 billion, down 0.8 per cent from the previous year ($91.0 billion).

Outward rollovers exceeded inward rollovers by $719 million in the September quarter. Total benefit payments for the year ending September 2013 were $51.7 billion, an increase of 6.4 per cent from the previous year ($48.6 billion).

APRA released a discussion paper on changes to its superannuation statistics on 14 November 2013, in which it proposed to revise the Quarterly Superannuation Performance statistics publication and introduce a Quarterly MySuper Statistics report. Accordingly, select statistics will be released on an interim basis for (at least) the September 2013 and December 2013 quarters, pending completion of this consultation.

Further information can be found under the ‘Important notice’ section of the September 2013 Quarterly Superannuation Performance publication and in the discussion paper.

Copies of the publication are available on APRA’s website at:
www.apra.gov.au/Super/Publications/Pages/quarterly-superannuation-performance.aspx

APRA releases second set of final prudential practice guides (PPGs) for superannuation

The Australian Prudential Regulation Authority (APRA) has today released eight final prudential practice guides (PPGs) for the superannuation industry together with a response paper, Second set of prudential practice guides for superannuation.

PPGs provide guidance on APRA’s view of sound practice in particular areas that may assist a registrable superannuation entity (RSE) licensee in meeting the requirements in APRA’s prudential standards. APRA is releasing this second set of eight PPGs as part of its ongoing work to support the implementation of prudential standards for superannuation and update a broad range of existing superannuation guidance material. The PPGs cover defined benefit matters, contributions and payments, investment risk management and remuneration.

APRA consulted in May 2013 on draft versions of the PPGs it has released today. The response paper outlines the key issues raised in the seven submissions received and how they have been addressed in the final PPGs, where appropriate. The eight superannuation PPGs are:
New PPGs:

  • Prudential Practice Guide SPG 160 Defined Benefit Matters
  • Prudential Practice Guide SPG 222 Management of Reserves
  • Prudential Practice Guide SPG 511 Remuneration
  • Prudential Practice Guide SPG 530 Investment Governance
  • Prudential Practice Guide SPG 531 Valuation

Updates to existing superannuation PPGs:

  • Prudential Practice Guide SPG 221 Adequacy of Resources
  • Prudential Practice Guide SPG 270 Contribution and Benefit Accrual Standards
  • Prudential Practice Guide SPG 280 Payment Standards

A final remaining PPG, Prudential Practice Guide SPG 310 Audit and Related Matters, will be released before the end of 2013.

The PPGs can be found on the APRA website at:
www.apra.gov.au/Super/PrudentialFramework/Pages/superannuation-ppgs.aspx