Large fund diagnostic report An information session for superannuation fund trustees and administrators Graham Whyte, Assistant Commissioner, Superannuation David Taylor, Fund Engagement Team, Superannuation Wednesday 5 April 2017 UNCLASSIFIED – Large fund diagnostic report webinar

Contents Introduction 5 mins Large fund engagement approach 5 mins ATO risk differentiation framework 10 mins High level industry results 10 mins Understanding your report 15 mins Questions and answers 15 mins UNCLASSIFED – Large fund diagnostic report

Poll #1 How familiar are you with the diagnostic reports?

Graham Whyte Assistant Commissioner of Superannuation

A risk differentiation approach Likelihood of non-compliance Consequence of non-compliance 7% Key client 0% Higher risk 1% Medium risk 92% Lower risk UNCLASSIFED – Large fund diagnostic report

High-level industry results Graph 1: Relative position of the 251 funds rated in 2016 Graph 2: Relative position of the 261 funds rated in 2015 Graph 3: Relative position of the 265 funds rated in 2014 Consequence of non-compliance Likelihood of non-compliance Classification 2016 2015 2014 Higher Risk (top right) 2 Key Client (top left) 17 18 14 Medium Risk (bottom right) 8 Lower Risk (bottom left) 227 236 225 Not Rated 5 16 TOTAL 251 261 265 UNCLASSIFED – Large fund diagnostic report

Poll #2 Do you think these results are sufficient evidence for the ATO to have ‘justified trust’ in fund member reporting?

Comparison of consequence indicators 2016 2015 2014 1 Membership 27,013,599 28,613,114 21,511,696 2 Contributions $ 91,229,279,953 $ 93,741,445,523 $ 82,557,036,147 3 Account Balances $ 1,399,424,807,762 $ 1,300,143,929,591 $ 1,194,438,187,438 4 Active MCS lodged 13,650,578 13,765,445 13,750,039 5 Inactive MCS lodged 18,901,544 18,706,511 19,345,967 6 Number of Lost accounts 580,455 1,223,338 1,308,237 7 Total value of Lost accounts $ 11,315,422,964 $13,318,008,700 $ 13,161,657,731 UNCLASSIFED – Large fund diagnostic report

Percentage of funds met the benchmark3 Comparison of likelihood indicators Percentage of funds met the benchmark3   Indicator 2016 2015 2014 TFN1 Personal Contribution without TFN 93.09% 90.87% 91.30% TFN2 Correct TFN quoted 74.10% 69.73% 62.30% TFN3 Duplicate TFNs 86.94% 85.43% 89.68% TFN4 Non Individual TFNs 94.29% 94.09% 68.65% MCS1 Timeliness of MCS lodgment 95.22% 95.79% 93.21% MCS4a Completeness of MCS lodgment 66.83% 57.53% 38.83% MCS4b Open and Lost MCS accounts 42.23% 41.76% 26.96% LMR1 Lost members > 65 years 65.71% 63.77% 75.86% LMR2 Lost accounts under $4,000 80.00% 51.21% 43.84% LMR3 Timeliness of LMS 83.87% 88.89% 82.26% USM4 Timeliness of USM 87.04% 78.52% PVA2 Timeliness of co-contribution remittance PVAs 77.96% 68.56% 69.70% PVA4 Timeliness of LISC remittance PVAs 74.04% 70.27% 63.72% UNCLASSIFED – Large fund diagnostic report

Areas for improvement ‘Open and Lost’ Member Contribution Statement (MCS) accounts Timeliness of Unclaimed Super Money (USM) Completeness of MCS UNCLASSIFED – Large fund diagnostic report

What we’re doing to support funds Information Systems Risk Assessments and specific issue reviews Mergers and successor fund transfers Early engagement to assist with: Resolving voluntary disclosures Identifying lost members Addressing high value accounts, lost accounts and USM UNCLASSIFED – Large fund diagnostic report

Superannuation changes in 2017 and beyond ATO system incidents SuperStream Government rollovers in November 2016 Government contributions from May 2017 New fund reporting arrangements from April 2018 Super Changes Co-designing with industry UNCLASSIFED – Large fund diagnostic report

David Taylor Superannuation

A risk differentiation approach A strategy and investment model for the ATO A self-assessment tool for funds UNCLASSIFED – Large fund diagnostic report

Poll #3 What is the risk differentiation approach?

Understanding your report Enhancements Easier-to-read text and visual design Comparative results over 3 years Explanation of what the results mean Commentary for Key Clients Two indicator formulas revised Tailored Administrator report UNCLASSIFED – Large fund diagnostic report

Administrator report Administrator level view Assess performance Identifies priorities for improvement UNCLASSIFED – Large fund diagnostic report

Understanding your report Page 1 Title page Page 2 Fund results Page 3 Reference table Page 4 Definitions For key clients, page numbering will vary. UNCLASSIFED – Large fund diagnostic report

Page 2 – your results Fund name and ABN Categorisation Relative position in industry 13 indicators with green, amber or red score What action to take UNCLASSIFED – Large fund diagnostic report

Page 2 continued Changes to indicators Open and Lost MCS accounts compares Lost Uncontactable members reported in the LMS with the ‘open and lost’ MCS accounts Completeness of MCS lodgments compares the members reported in the MCS and in the Income Tax Return. UNCLASSIFED – Large fund diagnostic report

Page 3 – reference information SuperTICK Employer contribution transactions compliant with SuperStream Excess Concessional and Non-Concessional Contributions Release Authorities Members with Division 293 tax UNCLASSIFED – Large fund diagnostic report

Page 4 – explanatory information Insert image of page 4 Description of indicators Definition of terms Formulas UNCLASSIFED – Large fund diagnostic report

Poll #4 Please rate the report in terms of its usefulness to your business

Questions

For more information LargeFundDiagnostic@ato.gov.au SPRwebinars@ato.gov.au /atogovau @ato_gov_au UNCLASSIFED – Large fund diagnostic report

Exit survey