superannuation and employee benefits practice committee

Annual Review | 2011 | 44

2011 milestones▲ supporting the brand of actuary through proactive

and high quality input into public policy matters,

including in 2011 the Stronger Super changes, APRA

Standards, improved disclosure and reporting, and

post retirement issues to improve the efficiency

and adequacy of the retirement income system for

individuals;

▲ through the Superannuation Risk Management

and FCR Taskforce, supporting the development

of important new work for actuaries in the

superannuation field;

▲ continuing its review of all the existing professional

standards and guidance to make sure that they are

all up to date and also comply with the Institute’s

revised approach; and

▲ a strong presence at the Biennial Convention and

continued success of the Super Policy Forum.

Public policy inputThe Superannuation and Employee Benefits Practice

Committee (SEBPC) continues to be very active

in its dealings with the Government, Treasury and

other regulatory bodies on matters affecting the

superannuation industry and Institute members working in

that field. During the year the Institute sent 17 submissions

to various bodies on behalf of the SEBPC, including in

relation to the deductibility of TPD insurance premiums,

Stronger Super and matters related to the treatment of

pensions and income streams. The Benefits Projection

Working Group (BPWG) also assisted with the drafting

of submissions in relation to benefit projections for

superannuation funds, MySuper and fee disclosure, and

the new Standard Risk Measure. The SEBPC also made a

submission to APRA in response to the discussion paper

that describes its proposed approach to introducing

prudential standards for the superannuation industry to

implement those elements of the Government’s Stronger

Super reforms that come within APRA’s mandate.

The SEBPC also now has regular meetings with Treasury

to discuss various outstanding matters, including the

treatment of notional taxed contributions, allocations from

reserves, lapsing of Benefit Certificates on any benefit

amendment, the treatment of accumulation members

in Benefit Certificates, concessional contribution caps

for over 50s, and reportable employer superannuation

contributions (RESCs).

During the year, the Institute was invited to nominate

representatives for two of the Stronger Super Working

Groups. As a result, David Knox joined the MySuper

working group and Darren Wickham joined the

Governance working group. While the consultation

papers were confidential, our representatives were

allowed to consult with the SEBPC on a number of

important matters such as single versus multiple pricing

of MySuper products, operational risk reserves, insurance

issues, the treatment of defined benefits and transitional

issues.

The SEBPC continued to engage with the Tax Practitioners

Board (TPB), Treasury and the Minister regarding whether

actuarial services would, in fact, constitute tax agent

services under the relevant legislation and would

therefore require actuaries providing such certifications

and advice to be registered tax agents.

The SEBPC worked on the following 17 submissions and

letters during the year:

▲ a letter to ASIC outlining various case studies which

investigate the implications of using standardised

assumptions in the calculation of benefit projections

in line with the draft regulatory guide contained in

ASIC’s CP122;

▲ a submission to Treasury regarding concerns that the

definition of RESC in the Taxation Administration Act

1953 (Cth) was too wide and would have the effect

of including employer contributions which were not

provided in lieu of salary;

▲ a submission to the ATO in connection with Draft

Taxation Ruling TR 2010/D9 which relates to the tax

deductibility under section 295-465(1) of the Income

Superannuation and Employee Benefits Practice Committee



Tax Assessment Act 1997 of premiums paid by a

complying superannuation fund for an insurance

policy providing Total and Permanent Disability (TPD)

cover in respect of its members;

▲ a letter to Treasury outlining a number of concerns

with the current legislation relating to the

determination of notional taxed contributions for

defined benefit interests for the purpose of the

concessional contribution limits;

▲ a submission to Treasury regarding the discussion

paper released by the Assistant Treasurer and

Minister for Financial Services and Superannuation

on 28 February 2011 on the concessional

superannuation contribution caps for individuals

age 50 and over;

▲ a submission to the ATO regarding the treatment of

member benefits involved in superannuation fund

mergers;

▲ a submission to Treasury regarding MySuper and

important related issues in the Stronger Super

proposals;

▲ a submission to Treasury regarding the tax

exemption for income on current pension assets,

in particular the treatment of reserves in the

calculation of “superannuation liabilities” for the

purposes of taxation law;

▲ two submissions to Treasury regarding deductions

for the cost of TPD insurance provided through

superannuation;

▲ a submission to the Minister for Financial Services and

Superannuation in relation to the application of the

Tax Agent Services legislation to actuaries;

▲ a submission to the ATO regarding interpretational

and implementation issues associated with Tax Ruling

TR 2011/D3 “Income tax: when a super income

stream commences and ceases”;

▲ a submission to Treasury regarding MySuper and its

fee disclosure requirements;

▲ two submissions to the Australian Government

Actuary regarding Benefit Projections for

Superannuation Funds;

▲ a letter to the AGA regarding legislative changes

that will be required if the Superannuation Guarantee

increases from 9% to 12%; and

▲ a letter to APRA regarding the introduction of the

Standard Risk Measure developed by ASFA and

the FSC. The SEBPC will also shortly be making a

submission to APRA in response to the discussion

paper that describes its proposed approach

to introducing prudential standards for the

superannuation industry to implement those elements

of the Government’s Stronger Super reforms that

come within APRA’s mandate.

A copy of all submissions can be found on the Institute

website.

Professional Standards and Practice GuidelinesDuring 2011, PG 499.03 (Prudential Reporting under the SIS

Act) and a new PG 499.04 (Accounting for Superannuation

and Long Service Leave Liabilities under AASB 119) were

approved by Council. After reviewing the contents of GN

455 regarding Pre 1 July 1998 Funding Credits (PJFCs) and

considering the number of funds which still have PJFCs, it

was decided to simply withdraw GN 455 and not replace

it. PS 401 (Summaries of Actuarial Reports on the Financial

Condition of Defined Benefits Superannuation Funds) was

also withdrawn during the year.

PS 402 (Determination of Accrued Benefits for Defined

Benefit Superannuation Funds) is currently being revised

based on comments received from members on the

Exposure Draft that was released during the year.

Initial work has also commenced on drafting a new

Professional Standard (PS 406) to replace Guidance

Notes 451 (Unsegregated Superannuation Liabilities)

and 452 (Segregated Assets). However this work was

suspended until certain matters of principle were agreed

with Treasury and the ATO, in particular the treatment

of reserves or surplus assets when determining the

amount of income in respect of current pension assets

that should be tax exempt. A first draft of a Professional



Standard to replace GN 459 (Payments from Funds to

Employers) has also been prepared and is currently

being reviewed.

Also note that PS 405 (Cost of Death and Disability

Benefits in Superannuation Funds) will need to be

revisited now that the TPD premium deductibility issue has

been resolved with Treasury and to accommodate the

withdrawal of IT 2617. Guidance to replace GN 454 (AAS

25 “Accrued Benefits”) will be considered further after

the AASB releases an updated ED 179, which is expected

in the next few months. GN 465 (DB Pensions) will also be

reviewed after PS 406 is completed.

The Superannuation Risk Management and FCR Taskforce

has drafted a Practice Guideline regarding Financial

Condition Reports for Superannuation Funds which has

been released to members for feedback.

It is also worth noting that PG 199.03 (Economic

Valuations) was approved by Council during the year.

The SEBPC met with the Economic Valuations Taskforce

to discuss the applicability of the Practice Guideline

to superannuation and, following those discussions,

the Explanatory Memorandum was altered to address

concerns.

Significant progress was also made this year on other

professional standards and guidance and we hope to

complete this major project in 2012.

Events and activitiesAt the 2011 Biennial Convention, there were nine sessions

relating to superannuation and ageing, including the very

relevant topic of Managing Liquidity in Superannuation.

A Super Policy Forum was held in both Melbourne and

Sydney on “Superannuation Risk Management and

Financial Condition Reports” with an excellent panel of

speakers from the Institute’s Taskforce of the same name.

In 2012 this Taskforce will continue working on a draft

Practice Guideline for members.

Communication with the membershipThe SEBPC also keeps superannuation members up to

date on relevant matters through the publication of three

newsletters each year.

ConclusionI would like to take this opportunity to thank all the

volunteers who have contributed to the work of the SEBPC

during 2011, including members who helped review or

draft the various professional standards and guidance,

as well as all the sub-committees, taskforces and working

groups for their ongoing contribution.

Andrew Boal

Convenor

superannuation and employee benefits practice committee

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