Super news for June 2024

Court finds Active Super made misleading ESG claims

The Federal Court has found the trustee of Active Super (LGSS Pty Limited) contravened the law in connection with various misleading representations concerning its environmental, social and governance (ESG) credentials.

The Federal Court found that from 1 February 2021 to 30 June 2023, Active Super invested in various securities – both directly and indirectly – that it had claimed were eliminated or restricted by ESG investment screens.

“I am unable to accept LGSS’s contention that an ordinary and reasonable member of the relevant class would draw a distinction between holding shares in a company and indirect exposures through pooled funds,” his Honour Justice O’Callaghan said.

“It seems to me that such a consumer would not draw that distinction, including in particular because there is nothing in the Impact Reports or on the LGSS website that suggests that the claims that there was, for example, “No way” Active Super would invest members funds in gambling, tobacco and so on, was to be read subject to a proviso that there was a way in which it would do exactly that, by investing indirectly, not directly. In my view, that distinction is one which no ordinary reasonable consumer would draw.”

The Court will consider a pecuniary penalty at a later date.

Two serving members of the NSW Parliament were on the board of Active Super at the time of the finding, with Penrith MP Karen McKeown understood to have since resigned. Member for Leppington Nathan Hagarty remains on the board of the fund.

Total super assets up by 11.3%

Total superannuation assets increased by 4.2% over the quarter and 11.3% over the year to be $3.9 trillion, according to the latest quarterly superannuation data from the Australian Prudential Regulation Authority (APRA).

“This increase was led by strong growth in APRA-regulated funds, which increased by over 4.8% over the quarter, driven by strong returns from financial markets,” APRA said.

Of total superannuation assets, $2.7 trillion are in APRA-regulated funds.

Total contributions also increased by 11.3% over the year to $177 billion. Within contributions, employer contributions increased by 12.4% over the year to $133.3 billion as the superannuation guarantee rose from 10.5% to 11% on 1 July 2023, and member contributions increased by 8.2% over the year to $43.7 billion.

ASFA retirement index in line with CPI

The cost of funding a comfortable retirement increased by 3.3% over the last 12 months to end March, according to the Association of Superannuation Funds of Australia (ASFA) Comfortable Retirement Standard, just slightly lower than the annual CPI increase of 3.6%.

In the March quarter, the ASFA Comfortable Retirement Standard rose 0.7% to hit a record high of $72,663 per year for couples, and $51,630 per year for singles.

“Retirees continue to feel considerable cost of living pressure on their household budgets. Fortunately in the past three months we’ve seen the pace of price rises ease somewhat in key spending categories, namely food and fuel,” ASFA chief executive officer Mary Delahunty said.

Medical and hospital services rose 2.3% in the quarter, but insurance experienced the biggest increase, rising 3.7% from the December quarter and 16.4% annually – the strongest annual rise since 2001.

“Ongoing inflationary pressure reinforces the need for Australia’s strong superannuation system which is designed to ensure retirees can achieve a dignified lifestyle in their post-work years, and adequate retirement income to withstand these more challenging times,” Delahunty said.

HESTA members boost use of digital retirement tools

The $83 billion HESTA has found its suite of digital retirement tools are increasingly being used by members, with more than 300,000 of its 1 million members using them to engage with their super.

“We’ve seen a real shift in how our members want to engage with their superannuation,” HESTA chief executive officer Debby Blakey said.

“Our members are often shift workers and are balancing busy lives and want to access support on the go, 24/7 and in the palm of their hand.”

Nearly 100,000 members have used the funds’ new app since launching in July last year, while 200,000 have used Future Planner. Eighty percent of HESTA’s membership is female.

Future Planner helps members examine how different actions might affect their retirement outcomes.

“We’re seeing members really build their confidence. Like their retirement savings, confidence compounds, leading to more positive actions as members are encouraged by the progress they’re making towards a better long-term financial future,” Blakey said.

APRA fines Equity Trustees in message to trustees

Equity Trustees Superannuation Limited (ETSL) has been fined $782,500 by the Australian Prudential Regulation Authority (APRA) for failing to meet its legal obligations to report data to APRA.

APRA deputy chair Margaret Cole said that by issuing the fine, APRA wanted to send a clear message to industry of the importance of submitting data on time.

APRA says ETSL failed to report data by the required deadlines for AMG Super and Super Simplifier, lodging forms between 38 and 50 days late for the quarter ended 30 September 2023.

“We expect all entities to be compliant with our reporting standards to ensure APRA always has the most up-to date information to effectively monitor the safety and stability of Australia’s banking, insurance and superannuation systems,” Cole said.

“Notwithstanding the highly outsourced nature of the superannuation industry, accountability for meeting regulatory obligations sits with trustees. APRA expects trustees to maintain appropriate oversight of service providers, which includes ensuring the provider is adequately resourced to meet requirements.”

ATO urges funds to protect members against scams

The Australian Taxation Office is urging superannuation funds to remind their members to ‘Stop, Think and Protect’ before engaging with any contact claiming to be from the ATO, especially in the lead up to tax time.

Fund members need to remember to not share any personal identifying information unless it is with a trusted source, to be wary of phone calls, emails, SMS or voicemails pretending to be from the ATO, and to contact the ATO as soon as possible if something feels wrong or if suspicious activity has been noticed on ATO accounts.

It may also be a good time to conduct a super health check and review personal details, super balance and whether there are any unclaimed super amounts or multiple super accounts.

“An added benefit of members completing a super health check at least once a year, could be the early detection of fraudulent activity on their super account,” the ATO said.