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SuperStream Consultation Summary

Issue

Provision of required member information to a super fund

(recommendations 9.1, 9.2, 9.3)

Outcomes of Consultations

Throughout the consultation process it was agreed that the quality of data submitted to superannuation funds by employers is integral to the integrity of information flows. A minimum data set will be required and there is broad agreement that web services will need to be developed to achieve this outcome. These services should be linked back to key processes (such as member verification), target behavioural change and execute as a single process within transactions to ensure ease of use.

The SSR recommended that funds should not accept a member (and associated contribution) if sufficient information were not able to be provided. In the situation where an employer could not obtain a tax file number (TFN) they would be required to forward the superannuation contribution concerned to the ATO, along with other identifying details they have, with the contribution to be treated as unclaimed money. As a result of the consultation process, an alternative approach is recommended whereby the employer would be required to forward the superannuation contribution to a fund with as much information as possible and the fund would have six months to obtain a TFN and other identifying details. If the fund were unable to obtain the TFN, it would then send the money to the ATO and it would be treated as unclaimed money. The employer would be able to continue to make contributions to the fund until they are advised by the fund that they are unable to establish an account and all future contributions should be sent to the ATO.

Issue

Data standards

(recommendations 9.4, 9.5, 9.6, 9.7, 9.8)

Outcomes of Consultations

There is unanimous support that data standards be mandated for all superannuation transactions and that a phased implementation approach be adopted. Linkages will exist between data and payments for all superannuation transactions. Some concerns were raised about the ability of SMSFs to comply with mandated data standards, particularly SMSFs which are self‑administered, so it is suggested that a longer transitional period may be needed. This could be considered further by the SuperStream working group.

It was agreed that mandatory standards be based on the Standard Business Reporting (SBR) framework for:

  1. defining SuperStream terms and relationships; and
  2. defining transaction and reporting message formats (subject to resolution of some design and implementation issues).

It is further agreed that the new standards be adopted by all participants irrespective of whether it has been specified as a licensing condition or similar. Any changes to the taxonomy and message structure should be approved by a new governance body. It was recognised that to achieve the behavioural changes required there will be a need for incentives to encourage employers to comply with the new data and e‑commerce standards and a range of tailored sanctions developed (again after allowing for an appropriate transitional period).

It is agreed that the Bulk Electronic Clearing System (BECS) standard should be used as the basis for SuperStream electronic payments.

There is agreement that the introduction of data standards should provide the Government with opportunities to revise the current reporting arrangements. The reuse of data standards should provide an opportunity to streamline reports through consolidating requirements, improving the stability of information reported and regularity of reporting. ISO20022 and APCA reforms are to be considered during the design process to ensure future alignment.

Issue

Account consolidation

(recommendations 9.11, 9.12, 9.13, 9.14, 9.15)

Outcomes of Consultations

There was considerable discussion throughout the consultation process on the most effective way to reduce the recognised problem of workers accumulating multiple superannuation accounts throughout their working life with attached costs. Through improved means to identify where a person holds duplicate accounts, it was recognised that many of these accounts could be consolidated with a resultant increase in retirement balances through lower operating costs.

A phased process for consolidating APRA regulated accounts in the near term is suggested:

1 July 2011: Funds may use TFNs as the primary locater to find duplicate accounts.

1 January 2012: Funds can, where the member provides consent on an opt‑in basis, use TFNs to search SuperSeeker (the ATO's website for lost accounts) to locate lost accounts and consolidate these with the active account.

1 July 2012: Funds must undertake intra‑fund consolidation from this date with the process to be completed by 1 July 2013.

1 July 2012: The ATO will update SuperSeeker to include active accounts and from December 2012 funds can search SuperSeeker for all accounts with member consent.

1 July 2013: Consolidation of lost and inactive accounts (no contribution or rollover for at least two years) under $1,000 commences unless tagged by the member for retention. Abolition of member protection will occur from this date.

Prior to the commencement of these changes, there will be a process to confirm with members whether they wish to opt‑out of this consolidation exercise. The protocols developed by the ATO for determining the account for co‑contributions should apply to determine which account should receive the assets under this exercise. The Government is encouraged to resource the ATO to support this initiative as soon as practicable.

July 2014: Changes to the enrolment process for new employees through the use of an online combined TFN declaration and superannuation fund nomination form. Where a new employee does not indicate that they wish to direct superannuation contributions to an existing fund, the default position would be that an account would be opened in the default fund of the employer.

A consensus view on the most appropriate guidelines for the consolidation of APRA regulated accounts from 1 July 2014 was not able to be achieved during the consultation process. While there was a unanimous view that consumers should be given every opportunity to determine whether they wished to be a member of more than one fund and 'tag' accounts accordingly, there were two competing views on what should happen where no such election is made:

  • the view that all inactive (two year rule to apply) accumulation accounts should be consolidated into the current employer's default fund irrespective of the size of the account balance; and
  • the view that this process should be limited to those accounts with less than $1000, or alternatively, should be limited to those accounts created as a result of default workplace arrangements.

There was recognition that where accounts are consolidated under this initiative there is a possibility that a consumer's insurance arrangements will be impacted. There were a range of proposals considered in relation to this issue which aimed to balance the important role played by insurance cover provided through superannuation funds to address the level of underinsurance in the market, and the fact that account balances are often eroded through premiums on multiple insurance policies.

On balance it is suggested that where there was an insured benefit attached to an account which would be closed as a result of this consolidation initiative, the cover should be provided in the new fund up to the automatic acceptance limit of that fund with a member having the ability to opt‑out of this higher level of cover once it had been established (in order to reduce the possibility of anti‑selection). It is, however, recommended that this issue be given further careful thought by the SuperStream Working Group, ideally including the perspective of the group insurance providers, before a final position is adopted.

While the ability for a member to 'tag' an account as being ineligible for consolidation under these proposals was supported, there was a strong view that there should be no opportunity for this to be abused through making this a default condition of joining a fund. It would need to be an overt act by a member who placed a value on continuing to operate an inactive account.

Issue

Securing Super: Payslip reporting and fund reporting to employees

(Securing Super and recommendation 9.16)

Outcomes of Consultations

The Government's clear policy objective of ensuring that workers' superannuation entitlements are paid in a timely manner was noted. The proposals to ensure employees are advised of the amount of superannuation actually paid into a fund (in addition to accrued entitlements currently required under the existing Fair Work legislation) as well as moves to require funds to notify members, and their employer, if regular payments are not being made for an employee, were also supported. There is support, subject to ATO requirements, for the concept of amending the BAS so that employers would need to provide details of total contributions paid in the period, and sign a declaration of SG compliance, as a way of highlighting superannuation obligations.

There was, however, considerable concern expressed by employers and payroll providers in relation to the ability of payroll systems to be appropriately configured to meet the requirement to report actual payments made and that, at the very least, an appropriate transitional period may be needed to allow employers time to adjust. Payroll providers advised that this option may not be cost effective. It is recommended that further detailed consultation regarding the implementation of these initiatives be undertaken.

The following steps, and timeframes, are suggested:

Step 1 — 1 July 2012: In addition to the reporting of superannuation contributions accrued during the period covered by a payslip, there should be a requirement on employers to report the date upon which the contributions are to be made to the superannuation fund;

Step 2 — 1 July 2013 (subject to payroll systems being able to deliver this capability in a cost‑effective manner and consistency with complementary initiatives being developed as part of SuperStream): Employers will be required to report the actual payments made;

Step 3 — 1 July 2013: Funds to commence reporting electronically to members whether contributions have been received or not during a quarter (the advice would go out shortly after the expiry of the SG payment deadline) with members being invited to check transactions on the fund's portal. Simultaneous reporting to the ATO was considered but is not recommended. The challenges currently experienced by employers, especially small business, in meeting the administrative requirements of superannuation funds were outlined as part of the discussions around this initiative and there was clear support for the standardisation of requirements and other efficiencies (for example, Medicare clearing house) being introduced through SuperStream.

Issue

SuperStream Governance

(recommendation 9.17)

Outcomes of Consultations

It was agreed that a governing body is required to oversight the implementation of SuperStream on an ongoing basis to maintain the integrity of the data standards through approval of any changes to the superannuation definitions within the SBR taxonomy.

Two broad options were identified: 1) an advisory council established within an existing government framework and 2) a standalone body with control over the SuperStream standards.

The majority view throughout the consultation process was that the first option was supported but that a review of whether a standalone body was required or not should be undertaken in 2015.

Issue

SuperStream Implementation

(recommendation 9.9, 9.17)

Outcomes of Consultations

There is a clear view that the large scale change required to support the introduction of data standards and electronic transactions for superannuation requires a phased approach while providing certainty in terms of investment decisions and planning lead times.

The following phased approach is suggested for data and e‑commerce changes:

1 January 2012 — Data standards published and available for use;

1 July 2013 — Data standards and use of e‑commerce becomes mandatory for all rollovers between superannuation funds. Data standards and use of e‑commerce becomes mandatory for clearing houses, administrators and APRA regulated superannuation funds where contributions are received in the new standard format;

1 July 2014 (or such other date which is determined through the ongoing consultation process regarding data standards for SMSFs) — Data standards and use of e‑commerce becomes mandatory for large and medium sized employers making contributions and for self managed superannuation funds receiving contributions from employers in the new standard format;

1 July 2015 — Data standards and use of e‑commerce becomes mandatory for small employers making contributions.

It is recognised that to achieve the behavioural changes required there is a need for incentives to encourage employers to comply with the new data and e‑commerce standards and a range of tailored sanctions developed. Account consolidation measures should commence with the initial TFN measures (where funds can use TFNs as a primary locater of member accounts within a fund from 1 July 2011) and follow a phased approach with the complete account consolidation model in place by 1 July 2014.

The SuperStream program of reforms will be supported by the build and use of enabling services to be provided by the ATO on a phased basis from July 2012.


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