Superannuation data standard flawed by contributions loophole
A loophole in the superannuation data and payment schedules standards could encourage employers to misuse an exception for contributions over-payments, the Association of Superannuation Funds of Australia (ASFA) has warned.
It called for a total ban on employers exploiting the standard which deals with over-payments, to prevent them using negative contributions amounts and mutual funds.
"ASFA has concerns that, although there is a clear statement that 'over-payments are not catered for within the scope of the standard and MUST be managed via other processes as agreed between the relevant parties', the standard then goes on to describe that this can be done by mutual agreement and through the use of negative contribution amounts," its submission to the Australian Taxation Office said.
Employers could take unilateral action to use negative contribution amounts and wreak havoc on processing and administration operations, according to ASFA.
Allowing mutual agreements could lead to a proliferation of exceptions and a varied array of arrangements, and could undermine the concept of having a standard to begin with.
The ban should apply to accumulation funds, ASFA said, although it acknowledged the Stronger Super SuperStream Working Group's agreement to allow exceptions in the case of employers contributing to a defined benefit scheme.
ASFA said the industry should nut out an agreed process for employers who seek to have overpaid contributions returned.
AUTHOR
Staff Writer
Recommended for you
Underestimating the cost of insurance by almost $75,000 in a Statement of Advice is among multiple reasons that a relevant provider has faced action from the FSCP.
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
