In this guide
- Draft retirement income covenant released
- TWUSUPER calls off EISS merger
- Financial planning industry continues to shrink
- Superannuation industry at risk of losing billions due to climate change
- SMSFs must use SuperStream for rollovers
- Financial services coalition calls for broad financial compensation scheme
- Design and Distribution Obligations (DDO) go live
Draft retirement income covenant released
After releasing a position paper mid-July, the Federal Government has released draft legislation for the retirement income covenant – Treasury Laws Amendment (Measure for a later sitting) Bill 2021: Retirement income covenant.
Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume, said the draft legislation would codify the obligation for superannuation trustees to have a retirement income strategy that outlines how they plan to assist their members in retirement.
“The strategy must consider how the trustee will assist their members to balance maximising their retirement income, managing risks, and have some flexible access to savings,” Senator Hume said when releasing the draft legislation.
The government has also cleared up confusion around whether the covenant would include self-managed super funds (SMSFs) in the draft legislation by explicitly stating in its explanatory memorandum: “This covenant does not apply to trustees of self-managed superannuation funds”.
TWUSUPER calls off EISS merger
TWUSUPER has announced they will not be moving forward with a possible merger with EISS Super. The two industry funds announced they were in discussions in April this year.
A TWUSUPER spokesperson said “TWUSUPER’s motivation in entering merger discussions with EISS was the potential benefit members of both funds would achieve from greater scale. We also felt EISS members would benefit from TWUSUPER’s strong investment performance. Following extensive due diligence TWUSUPER will not proceed with a merger with EISS at this time. Any merger must be in members’ best interest. TWUSUPER is now pursuing other growth options.”
Free eBook
Retirement planning for beginners
Our easy-to-follow guide walks you through the fundamentals, giving you the confidence to start your own retirement plans.
"*" indicates required fields
In August this year APRA announced that EISS Super was one of the 13 underperforming funds in it’s test of MySuper funds.
Financial planning industry continues to shrink
The number of financial planners in Australia is continuing to fall, with almost 9,000 financial planners, or 30%, leaving the industry since 2018.
At the end of June 2021 there were 19,382 financial advisers operating in Australia, according to Rainmaker Information’s latest Financial Adviser Report.
The number of Australian Financial Services Licensees (AFSLs) fell 10% to 1,907 during the 2020-21 financial year. Advisers that are part of a bank-owned licensee fell 39.6% during the same period.
The numbers also reveal that the exodus of advisers is most pronounced from larger practices. The number of financial advisers at AFSLs with more than 500 advisers fell 60.2% over the last financial year, while the number of advisers working for small practices with just one or two advisers actually grew by 0.6% over the same period.
Superannuation industry at risk of losing billions due to climate change
The Association of Superannuation Funds of Australia (ASFA) has warned that the absence of a commitment to net-zero greenhouse emissions by 2050 could see the superannuation industry lose billions of dollars in investment returns.
“It is estimated that close to 10% of total economic value could be lost by 2050 if climate change continues its current trajectory. As custodians of Australians’ retirement savings it is imperative that superannuation funds provide adequate consideration to the mitigation of climate change risks,” ASFA said in a discussion paper on climate change risk.
ASFA said mitigation strategies that could be explored by super funds include reaching net zero greenhouse gas emissions in their investment portfolios by 2050 and adopting the Principles of Responsible Investment (PRI) approach.
2026 SMSF calendar
Our free calendar includes due dates for important documents plus suggested dates for trustee meetings and other strategic issues for your SMSF.
"*" indicates required fields
SMSFs must use SuperStream for rollovers
Self-managed superannuation funds (SMSFs) must now use SuperStream Rollover v3 for any full or partial rollovers into and out of the fund (expect for those in-specie).
SuperStream is the data and payment standard introduce in 2014 for all super funds. By digitising the process of making super contributions for employers, it was designed to make it easier for super funds to collect those payments.
Most SMSFs have been required to receive super guarantee contributions via SuperStream for some time, but the requirements have just now extended to include rollovers from 1 October 2021.
Financial services coalition calls for broad financial compensation scheme
A coalition of 15 financial services and consumer organisations are calling on the Federal Government to expand the proposed compensation scheme of last resort (CSLR) for victims of financial misconduct to provide compensation for a more comprehensive range of financial products and services.
Coalition members include the Financial Planning Association, the SMSF Association and CHOICE.
The coalition is concerned that the Government’s draft bill excludes large segments of the industry, including managed investment schemes and funeral expenses industry.
“When the Government announced its response to the Banking Royal Commission, we welcomed the commitment to establish a compensation scheme. Now, some 32 months since that commitment, the scheme proposed by the Government is incredibly disappointing. It will leave too many victims of financial misconduct without access to the compensation they deserve,” CHOICE chief executive officer, Alan Kirkland, said.
FPA chief executive officer, Dante De Gori, pointed out that consumers purchase financial services and products from a vast array of sources.
Super knowledge is a super power
"*" indicates required fields
“They deserve the same protections and access to compensation, regardless of where they make their purchase. A last resort compensation scheme must operate equally and fairly across the entire sector to ensure consumers have faith in the system,” he said.
Design and Distribution Obligations (DDO) go live
Issuers of products in the financial services industry are now required to determine an appropriate target market for their products and issue a Target Market Determination after the Design and Distribution Obligation (DDO) regulations went live in October.
The DDO regulations are designed to provide consumers with more appropriate financial products. Issuers and distributors will now be required to sell financial products to their target market appropriately.
The Financial Services Council (FSC) welcomed the reforms and chief executive officer, Sally Loane, said the FSC has been helping the industry prepare for the changes.
“The FSC recognised the significance of the DDO changes early, given we have members across many affected sectors. Two years ago we set out to design a set of tools to enable alignment and efficiency for businesses in the DDO regime,” Loane said.
The FSC has created target market determination templates and data standards for super funds, platforms and wraps, life insurers and fund managers.
“We are confident that the FSC, working closely with our members, has done as much as we can to help businesses transition to the new regime. We are also pleased ASIC has said it will take a ‘reasonable approach’ to the start of the regulations, which should assist businesses as they adapt,” Loane said.
Leave a Reply
You must be logged in to post a comment.