A member’s decision to change the investment strategy for a superannuation fund will not be enough to demonstrate that it is “active” and exempt it from key provisions of the Government’s Protecting Your Super Regime (PYSP), according to the Australian Prudential Regulation Authority (APRA).
In correspondence to superannuation funds outlining its approach to the new legislative regime, APRA has made clear that accounts will need to have received contributions for a continuous period of 16 months to have been deemed active.
“An inactive account is defined for the purposes of the insurance opt-in change as a MySuper or choice product for which no contributions and/or rollovers have been received for a continuous period of 16 months,” it said. “No other actions may be taken to indicate activity.”
However, superannuation funds guilty of breaching elements of existing superannuation legislation will be able to cite changes to the regime which have not yet passed the Parliament, according to APRA.
In what represents a highly unusual approach, APRA has told superannuation funds it will take account of legislation that has not even passed the Parliament, because the Government believes it will pass.
That legislation is the Superannuation Industry (Supervision) Act which is part of the Government’s so-called “Protecting Your Super Package” and will impact account aggregation and insurance inside superannuation.
APRA’s letter to superannuation funds states that they should follow standard breach procedures and report breaches to APRA within the required timeframe but adds: “Where the breach may relate to future law changes, a trustee may rely on identifying this matter in its breach report, subject to further advice from APRA regarding whether any additional action is required”.