Frequently Asked Questions - Superannuation trustees' response to COVID-19

Trustees should be working closely with their administrator to identify critical business activities, and the extent to which those functions can continue where the administrator experiences material disruption. In APRA’s view, critical activities include the day-to-day payment of benefits, processing rollover requests, investment switches and early release payments. Trustees must ensure their administrator has in place contingency plans for those activities. This is particularly critical for aspects of the administration function that are conducted offshore.

The Superannuation Data Transformation project will continue, however there will be a one year deferral for data collections from funds until September 2021. 

Enhancing the superannuation data collection to collect accurate and comparable data on the superannuation industry is essential to enable appropriate regulatory oversight, and transparency and accountability for trustees. Access to comparable and consistent data is essential for maintaining the stability of the superannuation industry and assessing the potential long term impacts of the COVID-19 pandemic on the superannuation system.

APRA will continue its internal work on the project to assess the pilot data received and finalise the remaining topic papers for Phase 1. Where trustees have capacity to engage on the project, APRA will look for new, and flexible ways to work with funds so that once the environment stabilises we are well placed to finalise the consultation process. 

No. APRA considers that the current conditions make it even more critical for trustees to be undertaking an assessment of the performance of their business operations, including an analysis of how their operations are impacting on member outcomes APRA expects trustees to be undertaking most of the analysis needed to comply with the requirements of the BPR. APRA will continue its work on addressing underperformance and holding entities to account.

Yes. APRA supervisors will continue discussions with these trustees to ensure that outstanding queries are resolved.  APRA considers it critical that the next iteration of the MySuper Product Heatmap, planned for December 2020, is based on data which has been validated by APRA.

However, noting the current operational challenges faced by trustees, APRA is open to providing extensions to requests for outstanding information requests, where needed. 

Trustees are encouraged to discuss timeframes with their responsible supervisor. 

APRA has been encouraging trustees to undertake a trial outcomes assessment in 2020, covering all or a subset of its MySuper and choice products. A trial outcomes assessment would be expected to provide RSE licensees with insights into the methodology, data and publication issues that may arise in respect of the outcomes assessment. Where trustees have the capacity to undertake this trial, they are encouraged (but not required) to do so, and to engage with APRA supervisors on the trial process and outcomes.

APRA’s regular statistical publications will continue, and trustees must therefore endeavour to meet their data reporting requirements as normal. As always, trustees should contact APRA at DataAnalytics@apra.gov.au and their responsible supervisor where they experience difficulty in satisfying their reporting obligations within the required timeframes. 

Yes. As announced on 19 March 2020, APRA is committed to publishing the updated MySuper Product Heatmap with updated fees and costs data in June 2020. 

APRA will postpone the commencement of this important piece of work until Q4 2020.  Impacted RSE licensees have been contacted directly.

Whilst RSE licensees must comply with RSE licensing law at all times, APRA’s view is that the prospect of action against an RSE licensee due to failure to meet the three-day rule during exceptional circumstances (administration peak periods or material ATO superannuation service disruptions) would be remote where the RSE licensee could demonstrate that despite taking every reasonable action non-compliance was unavoidable.

Yes. Publication of the findings of this work will be deferred for six months.

During 2019, APRA and ASIC required all trustees to review the robustness of their existing governance and assurance arrangements for fees charged to members’ superannuation accounts. APRA and ASIC have since engaged with individual trustees on the outcomes of their reviews, ensuring that trustees have credible plans for addressing identified weaknesses in a timely manner. Given the refocus of both agencies, APRA and ASIC will defer for six months publication of the industry-level findings that was originally scheduled for the first half of 2020.

SIS Reg 6.17D(3) requires an RSE licensee to pay the benefit to the member as soon as practicable, after having received a copy of a determination from the ATO.  

In complying with this requirement, APRA expects that:

• where the RSE licensee’s automated checking has not identified a red flag, payments will generally be made within five business days of receipt of a determination from the ATO; and 
• in exceptional circumstances – such as where the RSE licensee’s automated checking has identified a red flag and additional fraud or other verification steps are required, or where the payment is being made from interests held in defined benefit funds – APRA acknowledges that the process for making a payment may take longer. Nonetheless, APRA expects the RSE licensee to make payments as expeditiously as possible in these cases. 

APRA acknowledges that these timeframes may extend slightly where an RSE licensee experiences a high volume of applications at any particular time. 

APRA notes that such a process differs from the usual process for making payments under existing early release grounds, as the application process has additional security controls, and RSE licensees are exempt from undertaking upfront customer verification in accordance with their anti-money laundering and counter-terrorism financing (AML/CTF) obligations¹.

APRA acknowledges that the process for determining and paying amounts under the COVID-19 early release of super measure is different to the usual process for making payments under existing early release grounds. The AML/CTF Rule exempting RSE licensees from undertaking up-front customer verification means that RSE licensees will, in most cases, have less RSE licensee-verified information upon which to form a view about a payment. However, the security controls around the application process and the RSE licensee appropriately acting on red flags identified by their automated checking process will mean that for the majority of applications it will be reasonable for RSE licensees to depart from their usual fraud control measures in order to ensure payments are made to members as soon as practicable. 

 

In circumstances where an RSE licensee is able to satisfactorily demonstrate to APRA that it has followed the approach set out in these FAQs, APRA would be unlikely to take action against an RSE licensee should a fraudulent payment/s occur.

The ATO is working with individuals where it has established that the individual has made a genuine error in their application.  In those cases, the SIS Regulations allow for the determination to be revoked.  A significant proportion of those applications have involved the individual selecting the incorrect amount to be released from their super account, for example they might input $10 instead of $10,000.

The individual is often not aware of this error until they receive the application approval correspondence or the actual payment.

To ensure that those individuals who have made a genuine mistake are not disadvantaged and unable to access the early release benefits this measure was designed to provide, the ATO will revoke the first determination and issue a new determination. The new determination will not be for an amount greater than $10,000 when combined with the amount in the first determination. That is, the amount approved in the initial determination that is revoked and then the subsequent determination will not be greater than $10,000.

The ATO will not notify the trustee of any revocation and trustees should continue to make payments in response to any and all determinations received from the ATO, even in circumstances where a second determination for a member is received in respect of the same financial year, and whether or not payment has yet been made in response to the first determination. Where a fund receives a subsequent determination for the same member it will have a unique reference number in the data file.  

If a trustee makes a payment on the basis of a determination that is later revoked by the ATO, APRA’s view is that no breach of the payment standards in the SIS Act and Regulations will have occurred. However, where a trustee makes a payment after a determination has already been revoked by the ATO, APRA will not take any regulatory action for any breach of the payment standards in the SIS Act or the SIS Regulations in relation to that payment.

AUSTRAC have also confirmed that where there was a valid determination at the time of payment, the exemption from the requirement for a fund to undertake their customer identification procedure in relation to the applicant continues to apply.

APRA’s view is that where an employer is receiving the JobKeeper wage subsidy for an individual, RSE licensees should consider the individual to be ‘gainfully employed’²  for the purpose of the ‘work test,’³  even if that individual has been fully stood down and is not actually performing work. In APRA’s view, it is appropriate for an RSE licensee to take this approach because the individual is still employed and is obtaining a valuable benefit from his/her employer. 

APRA also acknowledges that an individual may be on JobKeeper and still be working reduced hours and that it may be difficult for an RSE licensee to differentiate between an individual member who is working, and a member who is not, but who is nonetheless receiving the JobKeeper payment. 

As such, in APRA’s view, RSE licensees need not distinguish between individual members on JobKeeper who are working reduced hours or those who have been stood down, and can assume that all members in receipt of the JobKeeper subsidy satisfy the ‘work test’ for the purpose of voluntary superannuation contributions.

APRA’s view is that RSE licensees should not assume members in receipt of the Pandemic Leave Disaster Payment or COVID-19 Disaster Payment are automatically ‘gainfully employed’² for the purpose of the ‘work test’³ and the acceptance of voluntary superannuation contributions. In this respect, RSE licensees’ treatment of the Pandemic Leave Disaster Payment and COVID-19 Disaster Payment will be different to the treatment of the former Jobkeeper payment given the key attributes of the new payments outlined below. 

An individual receiving the Pandemic Leave Disaster Payment would not be able to count the 14 days in which they receive the payment towards the work test due to the fact that the individual must not be working to be eligible for the payment. 

While the COVID-19 Disaster Payment could potentially supplement a person’s wages where they are working reduced hours, the payment is a personal income supplement (or replacement) rather than an employer-based wage subsidy. 

APRA notes that it is possible that people receiving these payments may return to work in the future and therefore still manage to satisfy the part-time work test.