SuperStream is a comprehensive package of reforms designed to enhance the 'back office' of superannuation and includes measures to:
- implement the new data and e‑commerce standards for superannuation transactions;
- allow the use of tax file numbers (TFNs) as the primary locator of member accounts;
- facilitate account consolidation and improve the treatment of contributions made without sufficient member details; and
- establish an advisory governance body to advise on the implementation and maintenance of the standards.
The Government's Securing Super reforms will also:
- provide better information about the amount and timing of superannuation payments to employees; and
- provide notification from funds to members on whether contributions have or have not been received.
The reforms introduced through SuperStream and Securing Super will improve the productivity of the superannuation system:
- The adoption of data standards will result in more automated and timely processing of transactions, improved efficiency, an easier system for employers to use, fewer lost accounts and more timely flow of money to members' accounts.
- Reducing the number of multiple member accounts will reduce administration fees and insurance premiums on multiple accounts paid per member and maximise retirement benefits.
- Through the Government's Securing Super initiatives, employees will be able to better monitor their contributions.
- The SuperStream Advisory Council will provide a structured forum for stakeholders to advise Government on issues on the implementation and maintenance of the protocols and data and service standards.
Industry submissions to the Super System Review estimated that savings up to $1 billion annually are achievable from the SuperStream reforms.
3.2 Timely and efficient superannuation transactions and improved flow of super to member accounts
It is estimated that the Australian superannuation system processes more than 100 million transactions per year, at a cost of over $3.5 billion.
Several aspects of the current system are inefficient.
- There are no mandated data or transmission requirements for transactions within the superannuation system. This has resulted in funds:
- having different data requirements and formats for processing data and payments; receiving poor quality data leading to members being incorrectly enrolled in funds with a resultant risk of multiple accounts being created;
- receiving insufficient member information preventing the correct allocation of contributions.
- There is widespread use of manual payment (cheque) and data transfer (paper forms) mechanisms that contribute to poor data quality and result in processing delays, duplicated and lost accounts that all add costs to the system.
SuperStream will implement reforms to address inefficiencies in back office processing by:
- improving the quality of data in the system;
- allowing the use of tax file numbers (TFNs) as the primary locator of member accounts;
- encouraging the use of technology to improve processing efficiency; and
- improving the way fund-to-fund rollovers are processed and the way contributions are made.
The Super System Review recommended the development of standardised forms and common data standards to support electronic transactions for superannuation. It also recommended that these standards should be compatible with the Standard Business Reporting (SBR) framework and provide for linked personal and financial data transmission.
SBR will be used as the platform to develop the taxonomy and message structures for superannuation transactions, along with the use of eXtensible Business Reporting Language (XBRL) for exchanging information. Additionally, the payment standard prescribed by the Australian Payments Clearing Association (APCA) and international financial messaging standards prescribed by the International Organisation for Standardisation (ISO20022) will be used.
Consultations also highlighted that, to achieve the necessary improvements in data quality there was a need to mandate the use of data and payment standards across all superannuation transactions involving member contributions and rollovers.
The Government will legislate to mandate the use of the new data and payment standards for superannuation transactions and reporting to Government in order to maximise the efficiencies.
The Government is mindful of the implementation issues the introduction of the data and e‑commerce standards raises for small employers and will continue to consult with employer groups on the best and most practical ways to achieve these objectives for small employers.
Smaller employers will be able to utilise the free services offered by the Medicare Small Business Superannuation Clearing House to streamline their processing.
The adoption of data and e‑commerce standards will have substantial benefits for all participants and will enable participants to communicate by using standardised business terms, while electronic transmission will allow for a more automated and timely processing of transactions with fewer errors. This will result in improved efficiency, an easier system for employers to use, fewer lost accounts and more timely flow of money to member accounts.
- Superannuation funds will receive member information and linked payments in a standard electronic format removing substantial manual processing. Improvements to the quality of member information received from employers will reduce costs associated with rework arising from incomplete or incorrect information;
- Employers will be able to send contributions in a standard electronic format removing the need to submit this information to separate funds in different paper formats;
- Employees/members will have contribution payments allocated to their account more rapidly and better quality data will result in less instances of lost super arising from incorrect or incomplete data being sent to funds. ;A reduction in processing costs will reduce fees charged to members in the long term.
During consultation, support was expressed for a phased introduction of SuperStream initiatives from July 2012 through to July 2015. Consultation highlighted the large scale change required to support the introduction of data standards and electronic transactions for superannuation.
The implementation timeline for the data and e-commerce standards is as follows:
- Early 2012: Data standards published and available for use by funds (voluntary uptake).
- July 2013: Data standards and use of e-commerce becomes mandatory for APRA‑regulated funds and SMSFs for processing rollovers and accepting contributions (provided by employers in the new format).
- July 2014: Data standards and use of e-commerce becomes mandatory for large and medium employers making contributions.
- July 2015: Proposed application of data standards and use of e-commerce to small employers subject to further consultation on impacts.
The Government will continue to consult with relevant stakeholders on implementation issues.
3.3 Consolidating multiple accounts and reuniting lost super
Lost and unnecessary superannuation accounts can have a significant impact on the retirement savings of individuals concerned and also add to fund administration costs.
As at June 2010, there were around 33 million superannuation accounts in Australia, being three accounts for every worker. This includes an estimated 5 million accounts recorded on the Lost Member Register.
Currently, processes for individuals wishing to consolidate accounts or obtain lost super can be cumbersome and time consuming.
The Government aims to increase retirement incomes by facilitating a steady reduction in the number of unnecessary and lost superannuation accounts. The Government's package of Stronger Super reforms will make it easier for superannuation funds and their members to locate and consolidate multiple superannuation accounts, including by allowing the wider use of TFNs.
These reforms will have considerable benefits:
- Members will have a streamlined process to consolidate accounts and avoid paying unnecessary fees, including insurance premiums, on multiple accounts. Any accounts with less than $1000 will be automatically consolidated to the current active account unless the member opts out.
- Superannuation funds will be able to search the Australian Taxation Office (ATO) registers for any lost or unclaimed superannuation as well as information on member accounts (member consent required) and advise the member that they may wish to consolidate their superannuation accounts.
The timeline for account consolidation is as follows:
- July 2011: Funds can use TFNs as primary locator to find accounts within a fund.
- January 2012: Funds can use TFNs to search the ATO's current service for searching for lost accounts — but only with member consent.
- July 2012: Where a member has multiple accounts within a fund, funds would be required to consolidate these accounts, where possible.
- July 2012: The ATO will provide a new online facility for members to view their active (but not their inactive) superannuation accounts that are currently reported to the ATO, in addition to their lost accounts and other superannuation monies held by the ATO (for example, unclaimed money). Funds will also be able to search the account information, with member consent.
- October 2013: Funds will report all inactive accounts, lost accounts as well as active accounts to the ATO.
- January 2014: Commencement of auto‑consolidation of lost and inactive accounts (two years without contributions or rollover) with a balance of less than $1,000 and accounts in eligible rollover funds. The process will be initiated by the ATO and conducted annually. The ATO would identify relevant accounts and advise the active fund (Fund A). Fund A would then be responsible for arranging consolidation unless the member opts out. Fund A would have a prescribed time to write to the member advising them that if they do not 'opt out' then Fund A will write to the other funds and commence the auto-consolidation process. As part of this process the member would be advised that there may be insurance cover in the other funds and they should consider this and other relevant information before making any decision. The member will have the prescribed time to advise Fund A if they do not want the accounts consolidated. If the member does not 'opt out' the current fund will then commence the consolidation process by advising the other funds which will have a prescribed period to process the consolidation.
- In addition, members and funds (with member consent) can use the ATO online facility at any time to search for all accounts, including inactive accounts. They will be able to claim any ATO‑held super monies through this online facility.
- July–December 2014: The enrolment process for new employees will be modified so that employees can actively consider account consolidation at this time. If the new employee does not exercise choice the default option would be to create a new account. Any lost and inactive accounts with a balance of less than $1,000 will be transferred into the new account through the auto‑consolidation process previously mentioned.
In the latter half of 2014 the threshold for auto-consolidation of lost and inactive accounts would be increased to at least $10,000 subject to a review of the threshold by the Treasury, ATO and APRA. The Government will continue to consult with industry to ensure that the administration of the account consolidation process is as efficient as possible, for example, through greater use of standardised forms and processes including standard proof of identity requirements.
Trevor is advised that ATO online can display his active and inactive super accounts and identify if he has any lost or unclaimed super. Trevor has two super accounts and decides he should consolidate them to his current active account held by GreenSky superannuation fund. Trevor accesses ATO online and elects to consolidate.
When GreenSky is contacted by the ATO, GreenSky commences the consolidation process.
3.4 Enhanced new employee enrolment process
As outlined above, an enhanced enrolment process will commence during July — December 2014 to ensure new employees consider account consolidation at the time of beginning new employment.
As part of the process employees will be able to access a listing of all their superannuation accounts from ATO online to assist with exercising choice. The employee can use this information and elect to have superannuation contributions made to their existing account or open a new default account.
Employees will also be able to use the information and elect to consolidate their other accounts online. The ATO will notify their active fund of their election to consolidate and the active fund will have a period of time to obtain consent and facilitate the consolidation.
Existing employees can also benefit from this process by logging onto ATO online at any time to view a list of their superannuation accounts, choosing to consolidate and electing to have the ATO notify their active fund of their consolidation request.
The enhanced enrolment process will utilise ATO online as a central portal to provide information on members' superannuation accounts and help them consider and facilitate account consolidation. This portal is available to members at any time and is not limited to the enrolment process.
The enhanced enrolment process, in conjunction with the broader measures to assist account consolidation, will reduce the number of multiple accounts and improve members' overall retirement benefits by reducing the impact of multiple administrative fees and insurance premiums.
Grace starts a new job and logs onto ATO online. While online, she could see a list of her superannuation accounts and exercises her Choice to have contributions made to an existing account using the information displayed. At the same time Grace elects to consolidate one of her superannuation accounts from her part‑time job during her university days.
At her leisure, Grace logs onto ATO online to view her superannuation information including a list of all her accounts. She later elects to consolidate another superannuation account from her previous job using ATO online.
3.5 No TFN contributions
The Super System Review made a number of recommendations to expand the use of TFNs to improve superannuation fund efficiency and assist with account consolidation. For this to work, employees and employers need to supply TFNs to funds.
Two options were considered by the SuperStream working group for dealing with contributions not accompanied by a TFN (no-TFN contributions):
- The employer could be required to forward the superannuation contributions concerned to the ATO, along with the identifying details that it has, and the contribution would be treated as unclaimed money. This is the option recommended by the Super System Review.
- Alternatively, the employer could be required to forward the superannuation contribution to a fund. If the fund was unable to obtain a TFN and other identifying details within a specified time frame, it would then send the money to the ATO, as part of the unclaimed money process.
The working group endorsed the second of these two options and the Government agrees with this approach. The new arrangement for the treatment of no‑TFN contributions will commence from 1 July 2013.
3.6 Regular information to employees on employer contributions
Currently, the law only requires payslips to report an employee's entitlements to superannuation, accrued during the pay period, even though the employer may not make the actual contribution until after the end of the quarter. Employees do not always know if their employer has failed to make contributions on their behalf.
Similarly, funds send out statements to members to notify them of contributions that have been made on their behalf for that year. These are sent on an annual basis and can be issued up to eighteen months after the pay period in which superannuation was supposed to be paid.
As a result of the time lag in the receipt of information, employees do not always receive information on their contributions in time to take action if contributions have not been made.
As part of the Securing Super package, the Government will legislate to ensure that employers identify when superannuation will be paid to employees, and that employees are given more information to better monitor their contributions.
3.6.1 Payslip reporting
From 1 July 2012, employers will be required to report on payslips an 'expected payment on or before' date in addition to the current entitlement during the pay period. In many cases this will be the superannuation guarantee due date, or a due date under a workplace agreement or award. In some cases, however, where they remit contributions sooner, employers may choose to disclose an earlier date.
This will provide up‑to‑date information to employees on when they can expect superannuation contributions and will allow them to follow up with their superannuation fund to confirm that payments have been made by the due date.
From 1 July 2013, subject to there being no significant payroll system costs, payslip reporting of actual contributions paid rather than just accrued contributions will commence, including the provision of information about which fund the contributions are being paid into.
Matthew works for a building company and is a member of XYZ Fund. He gets paid on a fortnightly basis. For pay period 2–13 July 2012, his employer will put on his payslip that he is entitled to $206 of superannuation guarantee payments and that the expected payment date will be on 28 October (as his employer remits superannuation guarantee payments on a quarterly basis).
3.6.2 Fund notification
In addition to payslip reporting (by employers), funds will be required to either issue six monthly statements which show contributions made or, report electronically to members on whether they have 'received' or 'not received' any superannuation contributions for that quarter. Funds could offer web portals, so that members can check their contributions online.
Compulsory notification will commence from 1 July 2013. The six-monthly statements commonly issued by funds which show contributions made would discharge this obligation.
As Matthew has provided electronic contact details to this fund, XYZ fund could send Matthew a quarterly SMS from 1 July 2013 to inform him that contributions have been made on his behalf for that quarter and that he can seek further information by logging onto the fund's web portal for transactions during that quarter. Matthew can then compare the payments of superannuation recorded on his payslip and the quarterly transaction statement and address any discrepancies at an early stage.
3.7 Advisory Council
The SuperStream working group chaired by Treasury has been overseeing the development of data and e‑commerce standards since March and will continue to perform this role until the end of 2011.
The Government recognises that there needs to be continuity in the governance and oversight of the SuperStream data and e‑commerce standards as the design details are finalised and implementation commences. Consequently, the Government has decided to establish a SuperStream Advisory Council to provide advice to Government on these matters when the working group winds up.
The Advisory Council members will be appointed by the Government and will meet regularly to monitor the implementation of data and e‑commerce standards. The Council will provide a structured forum where stakeholders identify improvements in the standards and the protocols around them and make recommendations for changes to Government. The Council will also report to Government on what the agreed measures of success for SuperStream are showing.
The Advisory Council will be supported by a secretariat located within the Government.
Further details on the membership and meeting arrangements will be announced by the Minister in due course.
It is expected that the Advisory Council for SuperStream will be established in early 2012.