Note: the numbering of these questions is fixed and will not change as new questions are added.
Updated: 4 July 2017
FAQ 1: How is the period measured in which an RSE licensee must complete a standard outbound rollover request to comply with SIS r. 6.34A?
FAQ 2: What is the impact on the three day timeframe in r. 6.34A for transferring rollovers of the transferring RSE licensee not having readily available the unique superannuation identifier (USI) for the relevant product in the receiving fund?
FAQ 3: What is the impact on the three day timeframe in r. 6.34A if the transferring RSE licensee does not readily have available the unit price information to calculate the amount to be rolled over?
FAQ 4: How is the period measured in which an RSE licensee must complete an inbound rollover?
FAQ 5: What relief from the 3 day rollover rule will be available to funds during scheduled processing delays such as the end of the fund’s reporting year?
FAQ 6: Does the provision of gateway services constitute a material business activity for RSE licensees and so become subject to the requirements of Prudential Standard SPS 231 Outsourcing?
FAQ 7: What approach should an RSE licensee adopt if it considers that a fund under its trusteeship, or a Division within a fund, is at risk of not being ready to meet its published transition-in completion date for the purposes of the Superannuation Data and Payment Standard (the Standard)?
FAQ 8: How should RSE licensees address the interaction between the three-day rollover rule and processing delays, such as the end of the fund’s reporting year? (updated 4 July 2017)
FAQ 9: Section 29WA(2) of the Superannuation Industry (Supervision) Act 1993 requires that a RSE licensee must treat contributions in relation to which the member has not given any direction as a contribution to be paid into a MySuper product from 1 January 2014. What are APRA’s expectations regarding RSE licensees engaging with employers where the RSE licensee is the licensee of an RSE that is not seeking MySuper authorisation or is seeking MySuper authorisation but may not have a MySuper authorisation at 1 January 2014?
FAQ 10: Regulation 6.34A of the SIS Regulations refers to regulation 4.02 of the SIS Regulations. Is this reference correct? NEW (added 1 April 2014)
A: Under SIS r. 6.34A, an RSE licensee must complete a standard rollover as soon as practicable but not later than 3 business days after receiving the request containing all mandated information. The mandated information to initiate a rollover to a fund other than a SMSF is specified in Schedule 2A to the SIS Regulations if the application is made directly by the member, or in SIS r. 6.33A(2) if the application is made by the receiving fund on behalf of the member.
APRA considers the transaction is required to be complete by no later than close of business on the third clear business day from receipt of the completed application by the RSE licensee or its nominated agent, such as an administrator or gateway service provider. Thus if an application were received at noon on Monday, it must be completed by no later than close of business on Thursday.
APRA expects that the transferring RSE licensee will complete the transaction in compliance with the Superannuation Data and Payment Standards 2012. Completion of the transaction is considered to be provision of money to the receiving fund’s bank account and all requisite data required by r. 6.34B to the receiving RSE licensee.
A: The RSE licensee is required to comply with the 3 day timeframe for completing a standard outbound rollover in all circumstances.
The Data and Payment Standards - Rollover Message Implementation Guide forms part of the Superannuation Data and Payments Standards 2012 and so also must be complied with. It requires that the transferring RSE licensee include a USI for the receiving fund’s product as part of its rollover message.
a) If the transferring RSE licensee receives a rollover application directly from the member, and it is for the whole of the member’s balance, there may be a practical difficulty for the transferring RSE licensee. This might occur where a member submits a rollover request for their full balance in accordance with Schedule 2A of the SIS regulations but does not include a USI for the receiving fund. The USI is not a mandated field in Schedule 2A, so the transferring RSE licensee must still comply with the 3 day time period in accordance with SIS r. 6.34A.
In such cases, the transferring RSE licensee should consult with the receiving RSE licensee to obtain the correct product USI if time permits. Otherwise the transferring RSE licensee could incorporate, from the ATO’s Fund Validation Service, the USI for the receiving fund that best fits the information available to the transferring RSE licensee.
In APRA’s view, a receiving RSE licensee with multiple USIs has a vested interest in ensuring the correct USI is readily available to the transferring RSE licensee. At a minimum, receiving RSE licensees with multiple USIs need to have a process to manage USI mismatches internally, and to interact with transferring RSE licensees and members to make sure their USIs are readily available (at the member level) so that a member-initiated rollover via a transferring RSE licensee can be performed within the three day timeframe.
b) In the case of a member request to transfer part of the member’s withdrawal benefit - SIS r. 6.34 applies where the transferring RSE licensee receives the information required by the form specified in Schedule 2A (see SIS r. 6.34(1)(c)(i)) as well as any other information reasonably required to give effect to the rollover or transfer.
If the USI information is not provided by the member in that Form, but it is reasonable for the transferring RSE licensee to action the request anyway, the RSE Licensee must perform a standard transfer in the 3 day period. If the transferring RSE licensee considers that the USI is reasonably required to give effect to the rollover or transfer, SIS r. 6.34 will not apply and therefore the 3 day timeframe does not yet commence. In that case, however, the transferring RSE Licensee must ask for the USI (and any other information reasonably required to give effect to the rollover request) not later than 5 business days after receiving the request (SIS r. 6.33C).
c) In the case of a request being received by way of the receiving RSE licensee, the receiving RSE licensee must provide the USI to the transferring RSE licensee (SIS r. 6.33A).
A: The impact will vary depending on the need for redemption of particular investments to give effect to the rollover.
Under SIS r. 6.34A, an RSE licensee must complete a standard rollover as soon as practicable but not later than 3 business days after receiving a request containing all mandated information.
The mandated information to initiate a rollover to a fund other than a SMSF is specified in Schedule 2A to the SIS Regulations if the application is made directly by the member, or in SIS r. 6.33A(2) if the application is made by the receiving fund on behalf of the member.
The mandated information does not include unit price information needed to calculate the amount to be rolled over. Also under SIS r. 6.34A, a non-standard timeframe may apply to certain rollovers where a member has made an investment choice (on or after 1 July 2007) under SIS r. 4.02A or illiquid investments are involved.
Where an investment choice under SIS r. 4.02A has been made, the three day timeframe does not apply, provided:
- the RSE licensee takes steps to redeem the investment as soon as practicable but in any case not later than 3 business days after receiving the request; and
- the rollover is made as soon as practicable but in any event not later than three business days after receiving the proceeds of the redemption.
However, a maximum 30 day limit for the transaction does apply, starting from the time all mandated information is received.
Where member choice of illiquid investments is involved, the three day performance standard does not apply provided the relevant disclosures were made and written consents obtained.
A: SIS r. 6.34D requires that a receiving RSE licensee must allocate a rolled over amount to a member’s account as soon as practicable but in no more than 3 business days after receiving the amount and the data specified in SIS r. 6.34B(1) and as required under the Superannuation Data and Payment Standards 2012.
APRA considers the transaction must be complete by no later than close of business on the third clear business day from receipt of the details of the rolled over amount by the RSE licensee or its nominated agent, such as an administrator or gateway service provider. Thus if at noon on Monday: (a) money was received into the receiving fund’s bank account listed in the ATO’s fund validation service; and (b) data in compliance with the Superannuation Data and Payment Standards 2012 was received by the IP address for the receiving fund, the allocation must be completed by no later than close of business on Thursday.
APRA’s view is that completion occurs when the relevant amount can be identified in the records of the member’s account, attributed to the correct product or investment option. It does not require the actual purchase of assets, so long as such purchase is completed as soon as practicable and units (where relevant) are allocated to the member account at the price(s) prevailing on the day of deemed completion of the transaction.
A: APRA expects that RSE licensees will comply with the RSE licensee law. Should an RSE licensee expect that it will not be able to comply, APRA suggests that it obtain legal advice on the options available to it.
Note that APRA has advised that RSE licensees are not required to report to APRA a breach of the 3 day rollover processing requirement that occurs before 1 January 2014.
A: In a letter to industry on 15 March 2013, APRA stated that it considers the processing of rollovers and contributions to be a material business activity and, to the extent that some or all of that function is outsourced, the arrangements should meet the requirements of Prudential Standard SPS 231 Outsourcing (SPS 231).
The outsourcing of a material business activity is subject to SPS 231, regardless of whether the provider is contracted directly by the RSE licensee or is subcontracted by another service provider.
APRA’s view is that it is the RSE licensee’s responsibility to determine whether a gateway function is a material business activity. An RSE licensee should consider whether there would be a significant impact on the RSE licensee (e.g. on its ability to meet regulatory requirements) if the gateway were to fail.
Wherever an RSE licensee has outsourced its administration function, it should review its contract with its administrator to ensure that it makes specific reference to:
- compliance with the Superannuation Data and Payments Standard 2012; and
- the steps the administrator is taking to ensure that it is able to deliver the required service, including any arrangement it may have with a third party gateway provider.
A: Consistent with the risk management arrangements required under Prudential Standard SPS 220 Risk Management (SPS 220), APRA expects that RSE licensees will have addressed governance and operational risks associated with the implementation of SuperStream, and in particular the transition to handling inward and outward rollovers in compliance with the Standard.
Under clause 2.2.2 of the Standard, APRA has the power to determine an alternative transition-in completion date for part or all of the operation of an APRA-regulated superannuation entity (RSE).
APRA expects that RSE licensees who consider there is a material risk that they would be unable to meet their published transition-in completion date should immediately contact their APRA supervisor to advise both of the risk and the mitigants being put in place to address it. Leaving such notification to a time very close to the published transition in completion date could draw into question the general effectiveness of the RSE licensee’s risk management approach.
When an RSE licensee seeks an alternative transition-in completion date, it should provide an application in writing to the APRA supervisor, specifying:
- the names and ABNs of the RSE licensee and the RSE(s).
- where relevant (i.e. where the transition-in of an RSE is to be split on a product basis) the names of the specific products and their Unique Superannuation Identifiers (USIs).
- rollover values at RSE and/or product level.
- number of affected members at RSE, and/or product level.
- the published transition-in completion date and date band on the ATO timetable and the alternative completion date and band requested.
- reasons for the application.
The types of requests APRA anticipates as being likely to made are:
- Batching – the request is part of a request for a portfolio of RSEs and/or products (could be within a group under one RSE licensee, or could be a portfolio associated with a single outsourced administrator)
- Systems issues – the RSE licensee is making systems changes/upgrades they consider warrant an alternative date being approved.
- Other prudential concerns – for example, legacy issues such as different systems being used within an RSE due to previous successor fund transfer(s).
Before reaching a decision APRA will seek the view of the ATO on any systemic implications of requests.
A: Whilst RSE licensees must comply with RSE licensing law at all times, APRA’s view is that the prospect of action against an RSE licensee due to failure to meet the three-day rule during exceptional circumstances (administration peak periods or material ATO superannuation service disruptions) would be remote where the RSE licensee could demonstrate that despite taking every reasonable action non-compliance was unavoidable.
Note that APRA has advised that RSE licensees are not required to report to APRA a breach of the three-day rollover processing requirement that occurs before 1 January 2014.
RSE licensees should determine whether a failure to meet the three-day rule during a peak processing period (or at any other time) is a significant breach and therefore required to be reported to APRA. RSE licensees may wish to have a discussion with their APRA supervisor about the significance of any impending breach, how long the delay is likely to be, the volume of affected rollovers and any proposed prior notification to members. This information is necessary to demonstrate that the RSE licensee is handling the situation as best it can in the interests of all members of the fund. Indicators that the best interests of beneficiaries are being promoted might include data:
- that demonstrates that the breach periods will be minimised;
- that the RSE licensee will be taking action to further reduce processing times during peak administration periods;
- that rollovers subject to the three-day rule will be prioritised; and
- that an increasing proportion of rollovers will be processed within the required timeframe, even during scheduled peak processing times.
Where an investment choice under SIS Regulation r.4.02 has been made, the three-day timeframe does not apply, provided:
- the RSE licensee takes steps to redeem the investment as soon as practicable but in any case not later than three business days after receiving the request; and
- the rollover is made as soon as practicable but in any event not later than three business days after receiving the proceeds of the redemption.
However, a maximum 30 day limit for the transaction does apply, starting from the time all mandated information is received. Where member choice of illiquid investments is involved, the three-day performance standard does not apply provided the relevant disclosures were made and written consents obtained.
A: APRA expects that an RSE licensee who does not expect to have an authorised MySuper product as at 1 January 2014 will, as soon as possible, inform all employer sponsors that the RSE will be unable to receive default contributions from 1 January 2014 in the absence of all applicable members completing ‘choice’ documentation. Employers should be advised, within sufficient time, to make necessary arrangements to identify a fund that is authorised to offer a MySuper product into which they can make default contributions from that date.
A: In APRA’s view, this is an unintended drafting error. Regulation 4.02 applies to self-managed superannuation funds and APRA considers the correct reference should be regulations 4.02A and 4.02AA, which refer to APRA-regulated funds.
APRA’s interpretation of the operation of these provisions is as follows:
- Directions given pre-1 July 2013 under the old r. 4.02 are covered under r. 6.34A(4) and r. 6.34A(6)(a); and
- Directions given on or after 1 July 2013 under rr. 4.02A and 4.02AA are covered by r. 6.34A(4) and r. 6.34A(6)(b).