COVID-19 – Information for superannuation trustees

Frequently asked questions

This page was last updated 10 July 2020.

This page contains answers to frequently asked questions about current superannuation regulatory issues that have arisen from the COVID-19 pandemic.

Trustees of superannuation funds should also read ASIC and APRA’s joint letter and APRA’s FAQ page. We encourage you to visit these pages on a regular basis to stay up to date with the latest information. 

These FAQs do not constitute legal advice. You should seek your own professional advice to find out how the relevant regulatory requirements apply to you.

1. Early access to superannuation scheme and changes to minimum drawdown rates

1A. Do superannuation trustees need to issue an exit statement to members who have a zero balance due to accessing the COVID-19 early access to superannuation scheme? If so, when do they need to provide these exit statements?

Trustees must make reasonable efforts to provide a member with an exit statement within 1 month after becoming aware that the former member ceased to hold the product (see Corporations Act 2001 (Corporations Act) s1017D(3A), Corporations Regulations 2001 reg 7.9.51 and item 12 of Schedule 10A).

When a member ceases to hold the product will depend on when a member ceases to hold an interest in the fund under its governing rules. This may differ between funds, but in many cases, ASIC anticipates this will occur when the member’s benefit has been fully paid.

ASIC acknowledges that some trustees may need to process many exit statements in a short period of time due to the COVID-19 early access to superannuation scheme. If this causes a trustee to provide a member with an exit statement more than 1 month after the relevant time, the trustee must:

• be able to demonstrate that they made “reasonable efforts” to meet the 1-month timeframe (as required by s 1017D(3A)); and
• provide the exit statement as soon as practicable and no later than 6 months after the member ceased to hold the product (as per s 1017D(3)).

Where a trustee provides an exit statement to a member, the trustee may also want to inform the member that if the trustee accepts new contributions in respect of that member, a new account will be opened (that is, a new product will be issued) and the associated disclosure documents will be provided.

This FAQ was last updated 19 May 2020.

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1B. What are ASIC’s expectations of trustees in communicating to their members who have a zero or low balance due to accessing the COVID‑19 early access to superannuation scheme?

In addition to any exit statement requirements (see FAQ 1A above), trustees should understand how a zero or low balance due to accessing the COVID-19 early access to superannuation scheme affects a member’s interest in the fund and provide appropriate and timely communications to affected members. 

These communications should, at a minimum, address whether insurance has ceased and (if relevant) any options and steps for reinstatement of cover. This is consistent with ASIC’s expectations about member notification in relation to insurance ceasing in REP 591 Insurance in Superannuation and REP 529 Member experience of superannuation.

In addition, communications should be balanced and given in a way that ensures members have appropriate opportunity to make a decision (if there is one to make), with clear information about the steps to follow to implement that decision. See REP 655 Review of member communications: Protecting Your Superannuation Package (PYSP) reform.

This FAQ was last updated 19 May 2020.

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*UPDATED* 1C. What does ASIC expect of trustees in communicating to their members about the impact of COVID-19 on their insurance inside superannuation?

As outlined in ASIC and APRA's joint letter, trustees should understand how members’ insurance may be affected by COVID-19 and ASIC expects trustees to communicate these impacts to their members.

In addition to direct communication with members who have a zero or low account balance (see FAQ 1B above), trustees should include content within existing COVID-19 information on the fund’s website, as well as by providing direct links to resources where members can access more detailed and specifically relevant information.

For example, trustees should communicate:

• whether loss of employment or reduced work hours results in loss of cover, or a different level of cover, or changes to how insurance claims will be assessed;
• relevant rules around cessation of insurance (for example, in relation to minimum account balance or ongoing contributions requirements), including what options members have regarding reinstatement of cover if members lose their insurance;
• whether any pandemic clauses might apply and if so, what the effect of that is; and
• how members can access additional support or information when they’re making a claim.

In relation to cessation of insurance, ASIC notes that it is incorrect to simply state that an account with a balance that falls below $6,000, including due to early release, may or will lose insurance because of the Putting Members’ Interests First (PMIF) and Protecting Your Super Package (PYSP) measures.

If a member’s account balance falls below $6,000, the PMIF and PYSP measures do not:

• from 1 April 2020, cause insurance to automatically cease; or
• require an account to automatically be transferred to the ATO (because while a balance below $6,000 is one part of the criteria for the account transfer, there are several other criteria that must also be satisfied).  

For more guidance on the operation of the measures see: APRA’s FAQs on Putting Members’ Interests First (PMIF) and Protecting Your Super Package (PYSP).

This FAQ was last updated 10 July 2020.

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1D. What is ASIC doing to allow greater access to advice through superannuation as a result of COVID-19?

A package of measures has been announced by ASIC, including a temporary no‑action position allowing the provision of certain expanded intra‑fund advice relating to early access to superannuation. As outlined in the no‑action position, trustees must notify ASIC if they rely on this no-action position.

This FAQ was last updated 14 April 2020.

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1E. How should trustees communicate the potential long-term impacts of the COVID-19 early release of superannuation scheme on retirement balances?

All communications by trustees about the COVID-19 early release of superannuation scheme should be clear, accurate, balanced and must not mislead or deceive.

Where communications use projections or estimates of the impact on future retirement balances, ASIC considers trustees can minimise the risk of making misleading statements by:

• presenting estimated impacts adjusted for inflation (that is, estimates are expressed in today’s dollars);
• adopting standards and assumptions that are consistent with:
  • the default settings of the existing generic calculator provided by the trustee relying on ASIC Corporations (Generic Calculators) Instrument 2016/207 (in circumstances where the trustee makes available such a calculator); or
  • ASIC Class Order [CO 11/1227], in all other circumstances.

  (For instance, estimates consistent with CO 11/1227 would assume:

  • that wages will increase at the same rate as inflation;
  • investment earnings of 3% per year after inflation and investment fees;
  • annual administration fees and costs of an average member in a relevant investment option selected for modelling purposes;
  • a constant rate of super contributions until retirement;
  • retirement at age 67; 
  • annual insurance premiums of an average member in the selected investment option; and
  • that current tax and superannuation laws remain unchanged.)
• clearly disclosing the assumptions and variables used in the modelling and that the figures disclosed are merely estimates.

ASIC notes that this FAQ is not intended to expand the scope of the licensing relief provided by ASIC Class Order [CO 11/1227].

Where trustees suggest members access a generic calculator to calculate the impact of accessing the COVID-19 early release of superannuation scheme on the member's own retirement balance, then the calculator should operate consistently with ASIC Corporations (Generic Calculators) Instrument 2016/207.

This FAQ was last updated 16 April 2020.

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1F. How should trustees communicate with members about the Government’s temporary reduction to the minimum drawdown rates for the 2020-21 financial year?

Trustees should contact affected members directly with clear information about the changes and the trustee’s implementation approach.

Members in retirement phase need to understand how the halving of the minimum drawdown rates will impact them in light of:

• their current drawdown instructions; and
• the trustee’s implementation approach.

This communication is important because:

• an unexpected change to pension payments can cause members financial and emotional distress;
• without the right information  members may miss out on an opportunity to decrease their pension payments when this would suit them best.

It is especially important that any communications are timely, to enable members to make an informed decision about their financial needs for the 2020-21 financial year. Generally, trustees would be obliged to send a significant event notice to members as a result of the change to the minimum drawdown rates.

Trustees should provide affected members with a clear, factual explanation of:

• the changes to minimum drawdown rates;
• the member’s current drawdown instructions;
• what will happen to the member’s pension payments in the 2020-21 financial year if the member takes no action; and
• how members can change their current drawdown instruction, if they wish to.

Trustees also need to consider whether their processes for engaging with members about and accepting new drawdown instructions have sufficient capacity to meet member needs in a timely and effective way.

This FAQ was last updated 22 June 2020.

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2. Recalibration of regulatory priorities due to COVID-19

2A. Will ASIC be amending ASIC Class Order [CO 14/443] to extend relief from portfolio holdings disclosure obligations?

Yes.

In November 2019, ASIC amended ASIC Class Order [CO 14/443] to defer the first reporting date to identify the holdings of a superannuation fund to 31 December 2020 because the regulations setting out the required disclosures had not yet been made.

As at 16 April 2020, the regulations have not yet been made.

ASIC recognises that the current conditions may make it difficult for trustees to prioritise the development of appropriate disclosures even if the regulations were made soon. As such, ASIC will defer the first reporting date for portfolio holdings disclosure from 31 December 2020. Further details about this deferral will be announced on ASIC’s website.

This FAQ was last updated 16 April 2020.

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2B. Will ASIC be providing any relief from the requirement to hold an annual members’ meeting under section 29P of the Superannuation Industry (Supervision) Act 1993 (SIS Act)?

Not at this stage. We will closely monitor conditions and revisit this issue if appropriate. 

Most trustees have until 31 December 2020 to provide members with notice of the annual members’ meeting. For these trustees, the meetings can be held as late as March 2021. By this time, the current challenges with holding a physical meeting may not persist.

Furthermore, electronic or virtual annual members’ meetings are expressly contemplated in section 29P and the Explanatory Memorandum to the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2019, which introduced section 29P.

The objective of the annual members’ meeting requirement is to increase accountability and transparency by giving members an opportunity to discuss key aspects of the fund and provide a forum for questions about the fund’s performance and operations. Consistent with this objective and section 29P(5), ASIC expects trustees to hold annual members’ meetings in a manner that enables member participation and discussion.

ASIC notes that section 29P provides for regulations prescribing further requirements and such regulations have not yet been made. ASIC considers that trustees can still hold an annual member’s meeting in the absence of these regulations.

This FAQ was last updated 1 April 2020.

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2C. Will the publication of the industry level findings from the joint work on trustee’s oversight of fees and other charges be deferred?

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.

This FAQ was last updated 1 April 2020.

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 2D. How can I find out about how COVID-19 has affected other ASIC activities?

On 14 April 2020, ASIC announced details of changes to ASIC regulatory work and priorities in light of COVID-19. This included details on superannuation, financial advice, managed fund and insurance activities of interest to superannuation trustees.

On 11 June 2020, ASIC released its interim corporate plan, which was accompanied by a revised timetable of ongoing work. This revised timetable includes release dates until the end of this calendar year for certain ASIC activities that will affect the superannuation industry. Superannuation trustees will be interested in the timetable for:

• guidance on internal dispute resolution (IDR) and design and distribution obligations;
• consultation on ASIC's remediation policy and IDR data collection and reporting; and
• our report on insurance in superannuation.

The revised timetable also includes information on proposed timing of consultation and release of regulatory guidance in relation to legislation implementing the recommendations of the Financial Services Royal Commission.

This FAQ was last updated 22 June 2020.

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2E. Will ASIC be amending the transitional arrangements in RG 97 instrument ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070?

Yes.

ASIC will be amending the transitional arrangements for Product Disclosure Statements (PDSs) shortly to allow entities to come into the new disclosure regime from 30 September 2020 and require any PDS given on or after 30 September 2022 to comply with the new disclosure regime. There will be no change to the periodic statement transition arrangements. ASIC will issue a media release and update the RG 97 webpage when the amendment is made.

See also: details of changes to ASIC regulatory work and priorities in light of COVID-19 (row 9). 

This FAQ was last updated 26 May 2020.

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3. Other issues

3A. Am I able to apply to ASIC for relief? How does that work?

ASIC may grant exemptions from or modifications to the law in certain situations. You can apply to ASIC for relief from the requirements in the Corporations Act or SIS Act, where ASIC has the relevant exemption and modification powers.

To apply for relief, you need to provide a detailed application addressing the requirements in Regulatory Guide 51 Applications for relief (RG 51). Note paragraphs RG 51.58 to RG 51.60 in particular when applying for relief.

To the extent that an issue may be industry wide, trustees may want to engage with their industry association and consider applying for class relief.

Further details on how to apply are set out in Information Sheet 82. This includes information on fees for applications. Please send an electronic copy of your application letter to ASIC at applications@asic.gov.au.

This FAQ was last updated 14 April 2020.

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