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Attachment
Government Response to the Review into the Governance, Efficiency, Structure and Operation of Australia's Superannuation System

Chapter 9: SuperStream

Recommendation 9.1

Relevant legislation should be amended so that in respect of employees who are members of accumulation funds, an employer must provide to the superannuation fund (or clearing house) its ABN and at least:

  1. on first making a contribution in respect of a particular employee to that fund after the amendment comes into effect, the full name, date of birth, current address, email address (if known), mobile phone number (if known) and TFN of that employee, date of commencement of employment and the amount of the contribution being remitted in respect of that employee;
  2. for each subsequent contribution in respect of each employee, the employee's name, TFN and the amount being contributed for that employee. If the contribution is made via a clearing house, the fund SPIN should also be required;
  3. an employer that fails to meet the data requirements set out in (a) or (b) above becomes liable for an administrative financial penalty payable to the ATO in respect of each employee and each day it fails to meet the obligations. The ATO should have a measure of discretion about collection of the penalty. Alternatively, an employer that fails to meet the standards may be deemed to have failed to meet its SG Act obligations; and
  4. a fund should be prohibited from accepting as a member any person for whom there is not provided sufficient identification data (full name, address and date of birth) to provide a proper preliminary identification, and from accepting any contribution which cannot be reasonably identified as being attributable to a particular member.

Government response

9.1 (a)

Supported in principle

The Government agrees in principle with this recommendation and will consult with relevant stakeholders on design and implementation issues.

9.1 (b)

Supported in principle

The Government agrees in principle with this recommendation and will consult with relevant stakeholders on design and implementation issues.

9.1 (c)

Noted

The Government considers that imposing penalties on employers should only be considered further after experience with the other measures which will make the system easier for employers to interact with, can be evaluated.

9.1 (d)

Supported in principle

The Government agrees that it is desirable for key data to accompany contributions and will consult further with relevant stakeholders on the best approach to achieve this objective.

Recommendation 9.2

If, after having been provided a reasonable opportunity, the employee fails to provide a TFN or other required details to the employer, the employer's SG Act obligations are satisfied if the employer electronically provides such employee identification details as it has to the ATO together with the requisite contribution. The ATO would then treat the contribution as unclaimed money. On provision of the TFN, the ATO would remit the amount held for that employee to the employer's default superannuation fund, together with the employee's TFN, name, date of birth and, where provided to the ATO, current address, email address and mobile phone number.

Government response

Support in principle

The Government agrees that it is desirable for key data to accompany contributions and will consult further with relevant stakeholders on the best approach to achieve this objective. This will include consideration of other options such as applying existing unclaimed money processes to such amounts rather than instigating a new process for employer contributions to the ATO

Recommendation 9.3

The ATO should establish an employment web page where an employer can both register the tax status of a new employee in lieu of completing the paper TFN declaration and simultaneously advise the fund to which super contributions would be paid. The ATO would then communicate the new member details to the fund electronically.

Government response

Support in principle

The Government supports initiatives to improve efficiency and will further consider this recommendation in consultation with relevant stakeholders.

Recommendation 9.4

APRA should convene a stakeholder group including at least the ATO, employers, payroll providers, super administrators and trustee representatives to devise online forms covering all the common processes between:

  1. the employer and the fund;
  2. the fund and the member; and
  3. different funds, such as occurs with 'rollovers'.

Government response

Support in principle

The Government will work with key industry stakeholders to develop and establish standardised forms for various transactions and common data standards for electronic transactions.

Recommendation 9.5

The Government should be prepared to mandate the use of the forms, unless it is satisfied that there is near universal voluntary uptake.

Government response

Noted

The Government notes the recommendation and will give consideration to the need to mandate the use of standard forms and electronic transactions after further consultation with relevant stakeholders.

Recommendation 9.6

The Government should consider imposing a prescribed fee to be paid by the employer to any super fund to which the employer contributes on behalf of a member when the contribution is made other than in electronic form accompanied by sufficient details to adequately identify the member. That is, the fee will only apply if the contribution is paid by non-electronic means (such as by cheque) or if any payment is not linked with adequate member details. In order to give employers and industry time to adapt, such a fee should come into effect after education and an appropriate transitional phase.

Government response

Noted

The Government notes the recommendation and will consult further with relevant stakeholders on an appropriate response.

Recommendation 9.7

A condition of holding a licence to administer superannuation funds should be the capacity to provide e commerce facilities to employers of all sizes.

Government response

Support in principle

The Government agrees that administrators engaged by trustees should have the capacity to provide e-commerce facilities and will consult with relevant stakeholders.

Recommendation 9.8

Treasury should convene a working group comprising representatives of relevant segments of the financial sector to devise the process for development of SBR-compatible standards that provide for linked personal and financial data transmission and facilitate related software development. The standards should address transactions between employer and fund, fund and member, and between funds.

Development work should be financed through an industry levy.

All administrators and clearing houses should be required to adopt these standards as a licence condition.

Government response

Support

The Government agrees with this recommendation.

The development of Standard Business Reporting (SBR)-compatible standards that provide for linked personal and financial data transmission should be considered as part of the consultation and development process associated with recommendation 9.4.

Recommendation 9.9

As a standard licence condition, clearing houses (including administrators offering a clearing house service) should be required to provide linked member and funding data electronically to the fund within two business days of receipt of clean data.

Government response

Support in principle

The Government agrees that clearing houses should be required to transmit linked member and funding data within two business days and will consult with relevant stakeholders on implementation issues.

Recommendation 9.10

Having regard to the extended use of personal information proposed in SuperStream, Treasury should be tasked with preparing a Privacy Impact Assessment to help identify and assess any privacy impacts of the 'SuperStream' proposals adopted by the Government.

Government response

Support

The Government supports this recommendation and Treasury will prepare a Privacy Impact Assessment to identify and assess privacy impacts of the SuperStream proposals.

Recommendation 9.11

Relevant legislation should be amended to permit superannuation fund trustees and their agents to:

  1. use TFNs as a primary search key to link contributions and rollovers with member accounts;
  2. seek confirmation from the ATO in relation to each new member that the quoted TFN is correct;
  3. seek confirmation from the ATO in relation to each requested rollover to a SMSF that the member holding the quoted TFN is a member of that SMSF; and
  4. exchange the TFN with other trustees to identify accounts in multiple funds held by the same individual, and hence permit the trustee of the fund to which contributions are currently being made to invite the member to initiate consolidation of the accounts.

Government response

Support

9.11 (a)

The Government supports this recommendation and will introduce legislation to permit the use of tax file numbers (TFNs) as a primary search key from 1 July 2011. This was announced as part of the Government's Fairer, Simpler Superannuation election commitment.

9.11 (b) and (c)

The Government supports these recommendations and will consult with relevant stakeholders on design and implementation issues.

9.1 (d)

The Government supports this recommendation and will consult with relevant stakeholders on design and implementation issues.

Recommendation 9.12

Necessary legislation should be enacted to permit the trustee to auto-consolidate accounts without prior reference to the member, where multiple accumulation accounts within a single fund share a common TFN and member surname and the multiple accounts have not been established by deliberate elections by the member concerned.

Government response

Support in principle

The Government supports auto consolidation within a single fund provided the member is notified in advance, including of any impact on insurance cover, and has the right to opt-out.

Recommendation 9.13

The ATO should develop electronic means to display all the super funds of which an individual logging on is currently a member. Similarly, the ATO should provide an electronic facility to include all member accounts for which it holds TFN identification.

Government response

Support

The Government supports this recommendation, subject to further consultation with relevant stakeholders.

Recommendation 9.14

To facilitate consolidation of multiple accounts:

  1. procedures should be established between the ATO and administrators and clearing houses so that when an employer seeks to enrol a new member, the fund administrator (or clearing house if one is used) must validate the TFN provided with the ATO to ensure that it is the number for the individual named; and
  2. at the same time, the ATO should be required to check its data base to see whether it holds unclaimed money for that member. If so, it should advise the administrator and transfer the money. The ATO should also determine whether the member has more than one account. If the member has more than one account, the administrator of the new fund should be notified and then determine with the member whether they wish to consolidate their accounts.

Government response

Support

The Government supports this recommendation and will consult with relevant stakeholders on design and implementation issues.

Recommendation 9.15

Relevant legislation should be amended to:

  1. remove from super funds the current exemption from initial customer identification requirements under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 when a member exercises a choice to join that fund, or to roll into that fund the whole or part of a benefit from another fund. Risk-based customer identification would ordinarily be satisfied if the member has provided their TFN to the fund and the trustee has confirmed with the ATO that the TFN is correctly associated with the details for that member or the trustee has confirmation from its own records or another APRA-regulated fund that they have previously provided that level of identification;
  2. enable the trustee of an APRA-regulated fund, with the authority of a member, to initiate a rollover of all or part of that member's benefit from another fund as though the member had initiated the request to the exiting fund, without further proof of the member's identity being required;
  3. require the trustee of any fund receiving such a request to normally remit the member's balance electronically to the new fund within two clear business days, subject to a capacity for APRA to provide relief from this provision when prudential considerations require it;
  4. amend the choice of fund form to make it more user friendly and to enable the member to tick a box requiring all super accounts to be consolidated, with the nominated APRA-regulated fund to action as above. In view of the greater engagement of most SMSF members, and risks identified in the use of SMSFs for illegal early release of superannuation, this facility should not be extended to the trustees of SMSFs at this stage; and
  5. override any provision in the governing rules of any fund with a defined contribution component that would otherwise prevent the consolidation of member accounts.

Government response

Support in principle

The Government agrees with the overarching goal of streamlining the process for rollovers with some variation from the current recommendation.

9.15 (a)

The Government agrees that superannuation funds should be subject to the anti-money laundering and counter-terrorism provisions and will consult with relevant stakeholders on possible legislative amendments.

9.15 (b)

The Government agrees that rollovers and transfers should be expedited; and that the trustee of an APRA-regulated fund, with the authority of a member, should be allowed to initiate a rollover of all or part of that member's benefit from another fund as though the member had initiated the request to the exiting fund, without further proof of the member's identity being required.

It will consult with relevant stakeholders on implementation issues.

9.15 (c)

The Government agrees that trustees should forward money within two working days (except where APRA approves a delay for prudential reasons) and will consult with relevant stakeholders.

9.15 (d)

The Government agrees in principle that the choice of fund form and account consolidation should be simplified and will further consult on design and implementation issues.

9.15 (e)

The Government agrees and will consult with relevant stakeholders on design and implementation issues.

Recommendation 9.16

Relevant legislation should be amended so that:

  1. an employer is required to remit salary sacrificed and SG Act contributions no less frequently than it is required to remit a member's after-tax contributions;
  2. the timing of payment of SG Act contributions should be adjusted after SuperStream has been implemented so that SG payments align with employers' payroll cycles;
  3. the employer is required to report on each payslip issued to an employee the amount of superannuation to be paid to the employee's fund, whether SG, salary sacrificed or after tax contributions;
  4. the ATO is specified as the sole regulator generally responsible for compliance with all aspects of superannuation contributions, other than those relating to compliance with industrial awards. APRA should retain responsibility for overseeing the solvency of defined benefit plans and any action needed to restore a DB fund to a satisfactory financial position; and
  5. when an employee makes a complaint that an employer is not meeting its SG Act obligations, the ATO should continue, on a risk-assessed basis, to assess the employer's compliance with its SG Act obligations for all employees in the particular workplace, and not only the complainant.

Government response

9.16 (a)

Noted

The need for changes in the frequency of superannuation payments will be considered further in consultation with relevant stakeholders.

9.16 (b)

Noted

The need for changes in the frequency of superannuation payments will be considered further in consultation with relevant stakeholders.

9.16 (c)

Support

The Government supports this recommendation and will require employers to report on payslips the amount of superannuation actually paid to the employee's fund. This was announced as part of the Government's Securing Super election commitment.

Consistent with the Government's Securing Super commitment, the Government will also require:

  • employers to provide information on their employees' payslips about the amount of contributions actually paid;
  • superannuation funds to notify employees and employers electronically if regular payments are not being made; and
  • superannuation funds to notify employees quarterly if regular payments cease.

9.16 (d)

Support in principle

The Government will consult further on this recommendation.

9.16 (e)

Support

The Government supports this recommendation.

Recommendation 9.17

The Government should task Treasury with coordinating the initial implementation phase of SuperStream, and with advising on sustainable governance and oversight arrangements for the system into the future.

Government response

Support

The Government agrees that Treasury should be tasked with coordinating implementation and governance arrangements for the introduction of SuperStream.