IN THIS EDITION - August 2018
A word from Cath
Welcome to the August edition of IFS Update. A lot has certainly happened since our last newsletter.
While regulators are contemplating the separation of advice and product providers, the Productivity Commission is calling for more and better intra-fund advice. At IFS we’ve been turning our mind to the possibility of an enhanced model of intra fund advice, which, alongside digital advice could go a long way to delivering accessible, affordable advice to consumers at scale.
To address the proliferation of unintended multiple superannuation accounts, IFS is building an enhanced cross fund matching programme. This builds on the successes we shared in last edition, where we matched 108,000 accounts on behalf of nine funds. You can read more about this in the newsletter.
In this edition we’ll also take another brief look at Unpaid Super and what the working group has been up to, as well as an update on progress towards a new suite of digital advice tools.
As usual, I welcome your feedback or enquiries on any of the issues and initiatives featured here.
IFS Chief Executive
Developing the next generation of digital advice tools – an update
The changing advice industry is likely to see high quality advice increasingly unaffordable for ordinary working Australians, accelerating interest in digital solutions that can be offered at scale, and without conflicts.
IFS is working with its client funds, through the IFS Advice Forum, to design a new suite of digital engagement and advice tools for not for profit super funds.
IFS has commissioned member research that confirmed that there is low member awareness of digital advice tools and their capabilities, and revealed the features and functionality that members value.
We are now identifying potential technology partners.
To find out more or join this project contact Serg Premier, Executive Manager, Business Development and Marketing on (03) 9923 7145.
Thousands more accounts to be returned to members via cross fund matching
In the last edition we shared with you the successful results of AUSfund's initial cross fund matching programme to address the problem of unintended multiple superannuation accounts.
This programme pre-empted the report of the Productivity Commission, and the Government's "Protecting Your Super" legislation that will require the transfer of all inactive accounts below $6,000 to the ATO for cross fund matching.
While IFS, and industry funds generally support the intention of the legislation, we remain unconvinced that transferring all low balance inactive accounts to the ATO will produce the best member outcomes.
The ATO pays only CPI rates of return on member balances if and when a successful match is found. If no match is found, balances are transferred to the government coffers after 10 years.
IFS is working with Industry Super Australia (ISA), member funds, and other funds, to develop an alternative model of cross fund matching, utilising Ausfund.
Under this enhanced program, funds will send data, not actual accounts to AUSfund for data matching.
Only those where a matching active account is found will be transferred to AUSfund before being consolidated with the members active super account. If no match is found, the inactive account can remain with the industry super fund, or, if it is no longer in the member's best interest, be transferred to the ATO or to an eligible rollover fund. Under this model, members without an active account can remain invested in markets.
If the government's legislation passes without amendment, then clearly this proposal will lapse.
However, at the Senate Economics Committee hearings on 20 July it was clear that there is some disquiet from APRA about the unintended consequences of the Bill, which may see the government re-think the design of its package.
If you would like to participate in the IFS Working Group designing the programme contact Kate Brown, AUSfund Product Manager on 03 96574282.
ATO and IFS join forces to fight unpaid super
We’re pleased to see the ATO ramping up its Super Guarantee compliance activity with legislation before Parliament that will enhance the ATO’s enforcement powers, with greater visibility of super liabilities and new penalties including possible jail terms for those who fail to pay their super.
The Deputy Commissioner for Taxation, James O’Halloran attended the second meeting of the unpaid super working group that IFS has established with client funds.
This group has been formed to identify ways to improve the collection of unpaid super – whether that be through collaboration with the ATO, business process improvements, or new services that identify employers who are at risk of late or underpayment.
The tax office estimates that workers are missing about $2.85bn in super each year, and Industry Super Australia put it closer to $6bn. In the 2018 FY alone, IFS' Unpaid Super division collected almost $178m from 37,972 employers on behalf of 218,439 members.
If you would like to know more about the working group or would like to participate, contact Pauline Olson at firstname.lastname@example.org
What's new from Advice Solutions
The 18th Annual IFS Financial Planning Conference will be held at the RACV Club Melbourne on the 9th and 10th of August.
We are anticipating another very successful conference with central themes of Disruption, Opportunity & Growth and some very high quality speakers joining us.
- The Hon. Greg Combet giving his outlook for Super changes following the Royal Commission and Productivity Commission
- Hon. Bernie Ripoll discussing the Advice landscape
- Dascia Bennett, CEO SuperSA and Dr Nick Coates of ISA leading a panel discussion with Fund Execs
- and more.
Please feel free to share this invitation with any Fund Staff that would get value from attending. If you'd like to know more please contact Kumari at email@example.com.
And be quick! Conference registrations close Monday morning, 6th August
Do you have a question for IFS? Or a burning issue you'd like to see covered in the next edition of our newsletter?
We welcome your feedback too, so drop us a line, we'd love to hear from you.