Super news for May 2020

Access to early super resumes

Up to 150 people have lost almost $120,000 through identity theft when withdrawing funds from their super accounts according to the Australian Federal Police.

Earlier this month the Australian Tax Office (ATO) put a temporary hold on early access to superannuation claims while the alleged frauds were being investigated, but the processing of claims has now been resumed.

Assistant Treasurer Michael Sukkar says a small number of third parties who could be susceptible to criminal activity have been identified and the ATO is working with them to improve security.

“Australians can have confidence in the security measures the ATO has in place to protect the integrity of the early release of superannuation scheme,” Mr Sukkar says. He warns fresh cyberattacks are likely and advises never to divulge your MyGov details to anyone, including your tax agent. He declined to name which super funds have been targeted.

APRA reported that between 20 April and 10 May more than 1.3 million Australians had applied to withdraw $9 billion from their super fund accounts as a buffer against the coronavirus economic downturn. The average payment has been $7,546 and 94% of payments were made within five business days.

AustralianSuper, Hostplus, Sunsuper and REST all have paid out more than 100,000 applications each, and all paid out at least 95% of applications within five business days. The slowest funds to pay out applications included Intrust and Asgard, where more than 50% of applications took six to nine business days to pay out.

ASIC defers mortgage broker reforms

The Australian Securities and Investments Commission (ASIC) will postpone the start date of the mortgage broker reforms until January 2021 due to the economic impact of COVID-19.

The regulator announced the changes this month saying it would defer the commencement date of the mortgage broker best interest duty and renumeration reforms for at least six months, and its design and distribution obligations until October 2021.

All measures have already been legislated by Parliament in response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and were originally going to commence 1 July 2020. The design and distribution obligations were set to begin on 5 April 2021.

Royal Commission calls for submissions on COVID-19

The Royal Commission into Aged Care Quality and Safety is looking into deaths in aged care homes as a result of the coronavirus and encourages the public and aged care providers to make submissions if they have been affected by the pandemic in any way.

The Commission has been collecting information since March hoping to identify lessons learned from the pandemic, including those related to an outbreak at Newmarch House in Western Sydney, which became Australia’s second biggest cluster of coronavirus deaths in April.

Sixteen residents with COVID-19 have died at the facility since 18 April and, as of 14 May, 69 people have tested positive, including 32 staff and 37 residents.

Submissions can be made online at Aged Care Royal Commission until 30 June.

ASIC warns against day trading

The Australian Securities and Investments Commission (ASIC) warns retail investors against trying to profit from the current market volatility caused by COVID-19.

“We found that some retail investors are engaging in short-term trading strategies unsuccessfully attempting to time price trends,” ASIC says.

According to ASIC surveillance data, more than 3.4 times the amount of new retail investors have entered the market compared to benchmark periods, and there has been a marked increase in the number of reactivated dormant accounts.

“Retail investors chasing quick profits by playing the market over the short-term have traditionally performed badly, in good times and bad,” ASIC warns.

“Even market professionals find it hard to time the market in a turbulent environment, and the risk of significant losses is a regular challenge. For retail investors to attempt the same is particularly dangerous, and likely to lead to heavy losses – losses that could not happen at a worse time for many families.”

Super satisfaction

New data from Roy Morgan’s Superannuation Satisfaction Report shows self-managed funds and public sector funds both increased their customer satisfaction in March despite considerable market upheaval with the ASX200 falling significantly from its record high in February.

Self-managed funds rated the highest level of satisfaction (75%) from February, followed by public sector funds on 74.5%, both up by 0.3%.

In sharp contrast, satisfaction with industry funds fell 1.1% in a month to 64.4%, while retail funds are down by 0.2% to 60%.

Roy Morgan CEO Michele Levine says that although longer-term trends show increased customer satisfaction, the short term is a very different picture.

“The average satisfaction rating across all superannuation funds was 64.2% in March, a 3.4% increase from 2019, however this annual comparison misses a fall of 0.6% in the month of March after the ASX200 market peaked in late February,” says Ms Levine.

“Driving this fall has been a monthly decline of 1.1% for industry funds in March. In the last month the concern for industry funds and retail funds in particular is about how much Australians will take up the Federal Government’s $20,000 super fund withdrawal option over the next six months.”

SMSF annual returns deferred

The Australian Tax Office (ATO) is allowing an automatic deferral of self-managed super fund lodgements to 30 June due to the coronavirus crisis.

SMSF Association CEO John Maroney says he is extremely pleased by the ATO’s positive approach. “In these very difficult times, we have been able to work constructively with the ATO to find solutions for SMSFs affected by both the Government’s decision to lockdown the economy and the extreme market volatility,” says Mr Maloney.

Lodgement and payment deferrals will be automatically applied to SMSF 2018–19 annual returns with the 15 May lodgement date pushed back to 30 June 2020.

Older Australians see silver lining

New research from the Global Centre for Modern Ageing (GCMA) shows that despite all the restrictions and challenges, older Australians are doing well in the coronavirus pandemic.

In a survey of more than 1,350 people aged 60 and older, more than half (51%) see positive outcomes emerging from the pandemic, 19% believe social cohesion and wellbeing are likely positives and 80% can share examples of support they have received from others during this unprecedented period of social distancing.

Older Australians making weekly video calls are more likely to feel socially connected than those who don’t, with 21% saying they have used new technology for the first time.

The research highlights that while many older Australians face significant challenges, including limited contact with grandchildren, they also feel community spirit has improved, that people are increasingly keeping in touch and being neighbourly, and that more of us have been taking stock of what is really important.