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

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

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

Policy Update COVID MEASURES 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

Policy Update ERS - ANIMATION AIST animation to assist members to understand early release of super AUSTRAC – ATO ID process will meet KYC

Policy Update Bank account Amount requested may be more than details provided held in account – to ATO – not cannot reapply verified

Policy Update ERS – APRA STATISTICS Bank account Amount requested may be more than details provided held in account – to ATO – not cannot reapply verified

Policy Update ERS – FRAUD ISSUES Bank account Amount requested may be more than details provided held in account – to ATO – not cannot reapply verified

Policy Update ERS – LIABILITY ISSUE 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?

Policy Update RETIREMENT INCOME REVIEW – THE AIST VIEW Adequacy Member protection Fairness Fa Strengthen protections for those The purpose of superannuation Targeted measures to not actively involved in within the retirement income improve retirement outcomes superannuation and retirement system is to provide adequate for cohorts with low planning, while providing options income to ensure all Australians retirement income outcomes for those who are achieve a dignified and financially (e.g. women, low-income secure standard of living in earners and Indigenous retirement, supplementing or Australians) substituting the Age Pension Report given to Govt Focus on presenting 24 July 2020 member voice

Policy Update Royal Commission legislsation Proposed to be introduced by Dec 2020 Anti-hawking No other role Enforceable Advice measures or office for codes charging (3.4) trustees of (1.15) regime RSE’s (3.1) (3.2 & 3.3) • 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)

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

Policy Update REGULATORS – APRA Heatmaps Updated fees & costs data - June 2020 Member Outcomes Business Process Review & Trial Assessments Super Data Transformation One year deferral to Sept 2021 Review of Prudential Standards

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

Policy Update JOINT LETTER APRA/ASIC – 1 APRIL Liquidity Stress testing Heightened attention on Assess impact on • Increased member Liabilities and contractual Scenarios should reflect: switching commitments such as: Changes in future net • • Any deterioration in cash flows liquidity profile of • Currency hedging programs Member behavior • investments • Securities lending Market conditions • Take appropriate action to address Should ensure valuation of unlisted and illiquid assets remain appropriate and whether they need to be revalued

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 Work with insurers to members’ insurance Impact of reduction Communicate these assist members who may be affected by in account balances impacts to members: may face additional economic conditions due to: challenges in making a and public health • Clearly and claim, e.g. restrictions , e.g. • market downturns accurately • Obtaining medical • policy clauses and • In a balanced appointments relating to • early release manner • Providing evidence employment, work of disability hours, and • exclusions (such as pandemic clauses)

Policy Update INSURANCE IN SUPER CODE UPDATE Lifting standards & implementation continuing priority • 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

Policy Update INSURANCE IN SUPER CODE UPDATE 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 • Other Government changes also likely to require Code changes • APRA SPS 250 changes & ASIC REPs 591 & 533 • Claims handling as financial service • Universal terms

Policy Update LEGISLATION Passed 14 May - Permanent CGT relief for merging funds Bill Summary Anticipated start date 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 Treasury Laws Amendment (More Was to be from 1 July 2020… individuals aged 65 and 66 to make up to three years of non-concessional contributions under Flexible Superannuation) Bill 2020 the bring forward rule. STILL AWAITING PASSAGE Levy Imposition Amendment Bills Makes amendments to respective Levy Imposition Acts to increase the statutory upper limit & 1 July 2020 on the amount of levies APRA Industry PASSED & HAS ROYAL ASSENT Funding Bill Miscellaneous: including entities to be deductible gift recipients under income tax law, Treasury Laws Amendment (2020 including Superannuation Consumers’ Centre Ltd. Was to be from 1 July 2020… Measures No. 2) Bill 2020 STILL AWAITING PASSAGE