The developing COVID-19 scenario is stress testing the robustness of the governance structures, clarity of internal accountabilities and crisis management plans of all superannuation funds in a real time, rapidly changing, and highly unpredictable environment.
In response to the COVID-19 pandemic and the expected significant impact it will have on the economy, the Government announced a further stimulus package on 22 March 2020 to assist businesses and individuals.
The package includes two superannuation measures which have now been legislated: eligible members can get early release of superannuation of up to $20,000 tax-free; and retirees can reduce their pension or annuity drawdowns by up to 50 percent.
In addition, APRA and ASIC have largely suspended their regulatory agenda to ensure funds can prioritise operational excellence and members outcomes, and so that the regulators can focus on monitoring the impact of COVID-19 on the financial and operational capacity of funds. The notable exception is the remedial activities where ASIC’s focus is to accelerate remediation payments to customers.
The newly enacted measures, extreme market volatility and inevitable increase in unemployment (including in overseas operations), arising from COVID-19 will impact all areas of superannuation.
With a focus on operations, governance and risk, investment operations and insurance, KPMG’s Superannuation advisors are working with our clients to support them as they respond to COVID-19. We remain committed to helping out clients ensure their members’ best interests are protected in this challenging environment.
In considering the issues our clients are facing we believe the key implications and actions that should be considered by super funds in response to COVID-19 fall into three key areas – Administration and Operational Effectiveness, Investment Governance and Insurance.
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