The Australian Prudential Regulation Authority (APRA) has warned superannuation funds that it will regard their receipt of default super contributions in the absence of holding a MySuper approval as a "significant breach".
The regulator's position was made clear in a letter from APRA member Helen Rowell to superannuation funds reminding them of their obligations from 1 January next year, when the new MySuper regime becomes effective.
That letter makes clear that from 1 January, 2014, only funds with approved MySuper offerings can receive default superannuation contributions and that those super funds who do not intend to offer a MySuper product need to inform all employers making default contributions.
"Those RSE licensees that presently receive default contributions but have no intention of obtaining authorisation to offer a MySuper product are expected to be well advanced in the implementation of appropriate administrative arrangements to ensure that default contributions are not accepted into the fund from 1 January 2014," the letter said. "These funds should also have developed and commenced to implement a transition plan as required under Superannuation Prudential Standard 410 MySuper Transition to identify all members with an accrued default amount (ADA) and to transfer all ADAs to a fund offering a suitable MySuper product.
"APRA's view is that a contravention of the obligations in relation to the treatment of default contributions will constitute a significant breach for the purposes of section 29JA of the SIS Act," Rowell said. "Such a breach is notifiable to APRA. This view reflects the importance with which the payment of default contributions has been treated throughout the consultation on, and the development of, the MySuper framework."
