The looming Protecting Your Super reforms is putting some superannuation funds at risk of not meeting the deadline as they scramble to have compliant systems and processes in place.
QMV principal consultant for legal and risk Jonathan Steffanoni says many trustees and administrators are spending long nights and even working weekends to have arrangements in place by July 1.
"The tight timelines do create the risk that work around solutions are adopted to ensure compliance while more robust solutions are rolled out to systems and technology," he said.
Steffanoni said significant pressure seems to be around uncertainty and differing interpretations of the PYSP legislation and regulations.
|Sponsored by BNP Paribas|
The race for ESG leadership in APAC takes shape
"Software providers and third-party administration service providers could find implementation particularly tricky where multiple trustee clients have different interpretations."
APRA wrote to trustees on May 8 stating it is aware that the PYSP reforms may in some instances require significant changes to systems and practices prior to commencement on 1 July 2019.
But it did not mention it will extend the deadline for super funds struggling to implement the changes.
Some of the challenges or certainty funds are facing Steffanoni said include:
- Definitions of financial product and the requirement to apply to MySuper and bundled choice benefits individually;
- Application of fee caps to residual balances under $6000 after partial benefit payments;
- Interaction between the ATO transfer and fee cap refund obligations;
- Applicability of the requirements to retirement or pension phase products; and
- Implementation of second-order impacts, such as increases in group life insurance premiums.
These challenges highlight the importance of thorough industry consultation in the drafting of legislation, common regulatory guidance and expert legal advice in legislating significant policy changes, he said.