RG146 Superannuation Written Assignment

This written assignment is one (1) of two (2) assessment tasks. You must complete this assignment on your own—refer to the section on Academic Misconduct on page 5. Some questions will require you to undertake independent research outside of the subject notes.

It contains ten (10) questions which are worth a total of 100 marks. The value of each question is shown in parentheses beside each question number.

In this written assignment, you must try to answer all the questions and submit your completed assignment via the ASFA Learning Hub. The grade for this assignment is out of 100 marks, you must achieve 80% or higher overall to pass this assignment.

You are entitled to two (2) attempts for this written assignment. For more information, refer to ‘Assignment Results and Feedback’ in the Subject Information section of your subject notes.

This written assignment should be completed in a safe environment of your choosing (e.g. during work, at home, etc.). You will require access to the following:

• Organisational policy, procedures, legislation, regulations and codes of practice
• Financial services and superannuation product information
• Specialist financial services software and data
• Common office equipment, technology, software and consumables.

Handwritten assignments will not be accepted.

Refer to the email communication you received from ASFA Learning at the commencement of your studies regarding the timeframe for when this assignment is required to be submitted.

Resubmissions

For any resubmissions, those questions where you have not achieved 8 or above out of 10 marks will need to be resubmitted.

You are entitled to two (2) attempts for this written assignment.

Assignment resubmissions fees

Assessment Resubmissions	Fees	Details
First resubmission	Included in course fee	Resubmissions must be made within your course deadline date. Additional fees will apply for extensions required.
Second and third resubmission	$50 per submission	This is for each assessment piece being resubmitted.
Further resubmissions	N/A	Students deemed ‘NYC’ after 3rd resubmission must re-enrol into course. Re-enrolment rate applies.

Academic misconduct: Important!

You must NOT copy the work of another student. ASFA takes copying and plagiarism very seriously. Plagiarism is the presentation of the work of others as your own. Students must ensure the work they submit for any assessment that forms part of this subject is their own work. When you submit any form of assessment as part of this subject you are acknowledging that your assessment is NOT the result of copying or plagiarism. Penalties may be imposed where there has been a breach of these conditions.

To display your understanding of the course content, all questions must be answered in your own words. Copying and pasting directly from the course material is unacceptable. Likewise, copying and pasting material from the internet and other external sources and presenting it as your own work is also unacceptable. You must appropriately reference any material from the internet and other external sources.

Students may study as a group; however, each student is still expected to answer the questions in their own words. Submission of identical answers to any of the questions is not acceptable.

Do not loan your assignment to a student for any reason—if another student plagiarises your assignment (even without your knowledge), your assignment result may be disregarded and you may be assessed as ‘not yet passed’ in the subject concerned.

Where the Assessment Committee concludes that copying or plagiarism has occurred, the results of the students involved in the case may be disregarded and assessed as ‘not yet passed’ in the subject concerned.

Appeals process

An assessment appeals process is followed in the event that you are not happy with your result. This includes independent re-assessment of the papers where measurement of success is not clear. If you think that your assessment result does not accurately reflect your performance, you may request a re-assessment of your paper. This must be done within 10 days of receiving results and must be requested through an ASFA Student Advisor.

Reasonable adjustment

If you are unable to participate in training or complete any assessment due to a disability you may request a reasonable adjustment. Reasonable adjustment is a modification made to the learning environment, training or assessment methods used to enable students with a disability to access and participate in training on the same basis as those without a disability. The adjustment must be ‘reasonable’ in that it must not impose unjustifiable hardship on the person or ASFA. If you require additional assistance, please contact an ASFA Student Advisor.

Assessor feedback: First submission      

QUESTION 1                                                                                                                (10 MARKS)

This question focuses on the main sectors of the financial services industry and how they are interconnected with the superannuation industry. It also covers the economic environment.

1a.    Two sectors of the financial services industry have been listed below (Banking and Insurance). Complete the table by:

• Briefly outlining the role and responsibilities of both sectors.
• Explaining how each sector is interconnected with the superannuation sector.

(Interconnected: Refers to the way in which two or more things or people are connected and affect one another).                                                                                                                                                       (2 marks)

1b.   External forces are pressures or factors outside a super fund’s control such as changes in the economic, social and political climate. For each of the external forces listed:

• Describe a change/pressure outside the control of the superannuation industry
• Give a specific example to explain how super funds have responded to the change or pressure described

                                                                                     (3 marks)

1c.    In general, the federal government has the following four (4) broad economic objectives it aims to achieve:

• Sustainable economic growth
• Full employment
• Price stability
• A balanced trading position with the rest of the world

Choose two (2) of these objectives and for each objective:

• Give a definition
• Briefly explain the impact a contractionary phase in the business cycle would have on that economic objective.

                                                                                (2 marks)

1d.   Explain how monetary policy is implemented in the Australian economy. Provide one (1) example of how the Reserve Bank of Australia (RBA) might use monetary policy to influence economic growth.               (1 mark)

1e.    Inflation is a sustained increase in the general level of prices over a given period of time.

          Complete the table below to explain the negative effects of inflation for different market participants. Give two examples of market participants who are negatively affected by inflation, and explain how they are affected.                                                                                                                                                        (2 marks)

QUESTION 2                                                                                                                (10 MARKS)

This question focuses on the operation of the financial markets, investments and the types of products traded in the market.

You will need to undertake some independent research to answer the following questions about financial products:

2a.    The concept of a ‘financial product’ is central to the operation of Chapter 7 of the Corporations Act 2001 (Corporations Act). What is the general definition of a ‘financial product’ as per the Corporations Act? (1 mark)

2b.   The Corporations Act outlines the specific inclusions and exclusions of what constitutes a financial product. Research which sections of the Corporations Act includes these inclusions and exclusions. (1 mark)

2c.    Complete the table below to build a summary of the traditional asset classes.           (4 marks)

2d.   In the table below, specify the type(s) of return earned and rate of tax that applies to the return for each asset class held by complying superannuation funds.                                                             (2 marks)

2e.    When setting the investment objective and strategy, trustees need to consider several things, including the make-up of their membership.

          In your own words, how would you describe investment risk?                                            (1 mark)

2f.    How would a fund with a younger membership base differ from a fund with an older demographic in terms of its investment strategy?                                                                                                                     (1 mark)

QUESTION 3                                                                                                                (10 MARKS)

This question allows you to identify some of the policies and procedures relevant to a superannuation fund’s day to day operations in relation to administration and customer service. It also focuses on the role of the employer in providing Superannuation Guarantee for eligible employees, and the fund administrator in establishing a relationship with the employer.

3a.    Complete the following table to explain some features of a superannuation fund’s customer engagement activities. You will need to:

• Describe and explain the purpose of each document/item listed
• Use the ERASE acronym to explain when each document needs to be given to a member

                                                                                                                                                                             (4 marks)

3b.   Trustees of regulated superannuation funds are required to communicate to members the details of the internal and external dispute resolution services the fund has in place. What are two ways in which a superannuation fund can satisfy this requirement?                                                                   (1 mark)

3c.    Following a major investigation, a regulated superannuation fund has become aware of a major breach of security. An external contractor has gained unauthorised access to the personal data of all fund members who joined after March 2019.

          Outline what obligations the fund trustees have for reporting this matter under the Privacy Act.            (1 mark)

3d.   Hamish is a 22 year-old university student in his last year of completing a computer science degree. To gain some work experience, he started a casual job as a data analyst working 10 hours a week with International Data Solutions, a large software company. He joined Data Solutions on 6 April 2021 and is paid $22 per hour.

          Is Hamish’s employer required to make compulsory superannuation guarantee (SG) contributions on his behalf during the 2021/22 financial year? Explain how you came to this conclusion. (1 mark)

3e.    An employee of any business needs to carry out her or his professional duties and obligations with the highest principles of integrity, ethics and honesty amongst other things when dealing with customers externally and internally.

          Provide three specific (3) examples of how you maintain these standards in your role:

          Note: you may need to do some external research outside of your subject notes to answer this question.                                                                                                                                                                          (3 marks)

QUESTION 4                                                                                                                (10 MARKS)

This question requires you to complete tasks by researching either the superannuation fund you work for, or another superannuation fund of your choice. The superannuation fund you choose must offer a MySuper product (or option) and a retirement or transition to retirement product.

4a.    Complete the following details for your chosen fund.                                                               (1 mark)

• Use the Product Disclosure Statement (PDS) and fund website to answer the following questions for your chosen MySuper product or option (3 marks)
• Use the (PDS) and fund website to answer the following questions for your chosen retirement or transition to retirement product (TTR). (3 marks)

4d.   Is the MySuper product for your chosen fund promoted or marketed any differently from other products the fund offers? If so, explain how it differs.                                                                                          (1 mark)

4e.    List two (2) other funds which could be considered competitors to your chosen fund. Give a brief justification why you believe them to be competitors.                                                                                      (2 marks)

QUESTION 5                                                                                                                (10 MARKS)

Alistair is a member of the Seniors Super Fund. He has sent a written letter of complaint to the trustees of the fund arguing against the timing of when the fund processed his switch request. When he sent the request, the unit prices were higher but had fallen when the request was actually processed which resulted in a considerable reduction of his accrued benefits. He has requested the switch be backdated to a date where unit prices were more favourable, and he would, instead, make a gain from the switch instead of a loss.

5a.    Seniors Super Fund has received Alistair’s written letter of complaint via the post. What timeframe must the fund legally adhere to for responding to Alistair’s complaint?                                              (1 mark)

5b.   Superannuation funds are required to have an internal complaints process in place to deal with member complaints. As part of this process, what four (4) general steps will the Seniors Super fund follow before resolving and responding to Alistair’s complaint?                                                                    (2 marks)

5c.    Alistair is not satisfied with the response he receives from Seniors Super Fund and wants to take his complaint to the Australian Financial Complaints Authority (AFCA).

In your view, is Alistair’s complaint likely to fall within AFCA’s jurisdiction? Give a reason to support your answer.                                                                                                                                                            (1 mark)

5d.   AFCA cannot deal with complaints that relate to the overall management of a fund such as investment performance and fees.

          Outline two (2) more guidelines for complaints that can’t be dealt with by AFCA.   (2 marks)

5e.    After reviewing the facts, AFCA’s attempt to resolve the complaint by conciliation was unsuccessful. Identify and describe the two (2) next steps AFCA may take to resolve the complaint.           (2 marks)

To answer the next question you will need to access the ‘AFCA Transition Complaints Approach’ document which is available on AFCA’s website www.afca.org.au

5f.    In July 2018, Rosa had a complaint heard by the Superannuation Complaints Tribunal (SCT) with the outcome being that the SCT affirmed the trustee’s decision.

Rosa has just found out that the SCT was replaced by AFCA on 1 November 2018. Still feeling aggrieved, she decides to lodge the same complaint with AFCA hoping for a more favourable outcome. There has been no change to the facts or evidence supporting the matter in dispute.

Can AFCA deal with this complaint? Give reasons for your answer.                                   (1 mark)

5g.    Yasmine has discovered that her employer has not been making superannuation guarantee contributions to her superannuation fund, despite recording this on her pay slips. The superannuation fund confirms they have not received any contributions. Her employer claims she must have made an error because they have been sending payments.

          What action can Yasmine take to address her complaint?                                                       (1 mark)

QUESTION 6                                                                                                                (10 MARKS)

This question looks at different types of contributions and how those contributions are taxed. It also looks at eligibility for the Government co-contribution and tax offsets. Some calculations are required. All workings must be shown.

6a.    Sukari is completing her tax return for 2020/21 and wishes to claim a tax deduction for the personal contributions she made to a superannuation fund during this period.

          Outline the eligibility conditions she must meet to claim a tax deduction for these contributions.          (1 mark)

6b.   What contributions cap applies to any personal contributions Sukari makes if she claims a tax deduction for these contributions in 2020/21?                                                                                                        (1 mark)

6c.    Before lodging her tax return with the ATO, what steps will Sukari need to take so that her fund knows of her intention to claim a tax deduction for the personal contributions she has made?       (1 mark)

6d.   Ee Pin has recently joined the Big Bucks Super Fund into which his employer will pay SG contributions each month. He did not include details of his TFN on the Member Application Form when he joined as he was told by a colleague not to worry about it as the super fund will ‘sort this out’ for him.

          Identify and describe two (2) other options the fund has for obtaining Ee Pin’s TFN without the need to contact him directly for this information.                                                                                     (2 marks)

6e.    Candice has an assessable income of $44,275 and meets all criteria to be eligible for a co-contribution payment. She makes a personal contribution of $800 to her super fund in 2021/22.

          What is the maximum government co-contribution amount Candice will be entitled to? Show all workings.                                                                                                                                                                          (2 marks)

6f.    How much of the co-contribution received by Candice will count towards her non-concessional contributions cap? Explain your answer.                                                                                        (1 mark)

6g.    Sheldon contributes $1,500 in 2021/22 to a complying superannuation fund for his spouse Lucy who earns $38,600. Sheldon and Lucy meet the eligibility requirements for Sheldon to claim a tax offset in his 2021/22 tax return for these contributions.

          Calculate the amount of tax offset that Sheldon is entitled to. Show all workings.     (2 marks)

QUESTION 7                                                                                                                (10 MARKS)

Preservation involves keeping a member’s benefit entitlement in a superannuation environment until a condition of release is met. People over preservation age who are retired, or in the pre-retirement phase of their life, can provide for their retirement through retirement income streams. This question covers conditions of release, some of the calculations around income streams and the impact of deeming rates.

7a.    Andrew is 38 years old and has recently been diagnosed with a brain tumour. He would like to access his superannuation benefit to help pay for his treatment and medical expenses. Andrew was advised by his doctors that he is unlikely to see his 40th birthday. While he is still well enough, Andrew would also like to use a portion of his superannuation benefit to go on a holiday with his young family.

          Name two (2) conditions of release that may enable Andrew to claim part or all of his superannuation benefit. Outline any specific requirements he must meet for the benefit to be released under each of these conditions.                                                                                                                                                                          (2 marks)

7b.   Gloria is planning on retiring on 31 March 2022. At this time, she will be 59 years of age. Her superannuation benefit is worth $755,000 which consists of a tax-free component of $85,000. Gloria’s fund is a taxed superannuation fund.

          Calculate the amount of tax Gloria would need to pay if she decides to take her whole benefit as a lump sum. Show all workings.

          (Note: include the 2% Medicare levy in your calculations.)                                                 (2 marks)

7c.    Aarav turned 67 years of age on 11 October 2021 and retired on his birthday. He was entitled to a superannuation lump sum benefit of $300,000. He decided to take an account-based income stream commencing on 11 October 2021 and will withdraw the minimum payment for 2021/22.

          In the first year, the payment must be proportioned over the number of days remaining in the financial year from date of commencement.

          Calculate the number of days remaining in the financial year from Aarav’s commencement date. Show all workings.                                                                                                                                                       (1 mark)

7d.   Use the number of days calculated for Q7(c) and the relevant age-based percentage factor to calculate how much Aarav’s payment will be in the first year (i.e. to 30 June 2022)? Show all workings including correct rounding of your answer.                                                                                                                     (2 marks)

7e.          Jill is aged 86 and she sold her home that she owned for 40 years, on 1 July 2021 for $280,000. She has no superannuation at all. Explain whether Jill is able to contribute any     or all of the amount as a Downsizer contribution.

          (1 mark)

7f.           Peter has joined an APRA regulated default superannuation fund on 1 June 2021 and he          is aged 23. He has rolled in $7,000 from his previous superannuation fund. Discuss whether he is given default insurance or not. The new superannuation fund DOES NOT          have any exemptions for the riskiest quintile of occupations. 

          (2 marks)

QUESTION 8                                                                                                                (10 MARKS)

One of the trustee’s main duties is to invest a superannuation fund’s money. This question looks at factors affecting investment decisions including constraints and disclosure requirements.

8a.    Trustees of super funds must regularly review their investment strategy policies and risk management policies to ensure the covenants contained in the SIS legislation are always met.

          Identify and describe the three (3) investment covenants which are binding on the trustees of superannuation funds.                                                                                                                           (3 marks)

8b.   Valhalla Corporate Super Fund is a non-public offer accumulation fund which is only available to employees of Valhalla.

The Trustees have invested some of the assets of the fund in a resort development being undertaken by a company owned by business partners of the individual directors of the Trustee of Valhalla Corporate Super. The individual directors of the trustee are also members of the fund. The Trustee has invested 15% of its assets in the resort.

Considering the facts in this scenario:

• Explain whether the Trustee is in breach of the SIS in-house assets limits
• Explain whether the directors are likely to have breached the SIS covenant to exercise the care, skill and diligence expected of a superannuation fund director when making investments? (2 marks)

8c.    When setting a fund’s investment objectives and investment strategy, trustees need to consider several things, including the fund’s membership. Identify and give an outline of the two (2) investment strategies for a MySuper option.                                                                                                                                    (2 marks)

8d.   The product dashboard provides key information about MySuper products presented in a standardised way.

• List what information must be provided on the MySuper product dashboard
• Explain how this is of benefit to consumers when choosing a MySuper product (2 marks)

8e.    How quickly must the trustees update information on the MySuper product dashboard if there has been a change to:

• fees and costs
• any other measure published on the dashboard (1 mark)

QUESTION 9                                                                                                                (10 MARKS)

You are the Training Manager for ‘We Manage It’, a service provider who looks after the administration of several high-profile superannuation funds. You have a group of new Customer Service employees to train and have prepared the following questions for the upcoming induction program.

9a.    Outline one (1) defining characteristic for each of the following superannuation vehicles that can accept superannuation monies.                                                                                                                       (4 marks)

9b.   There are two (2) main superannuation fund designs.

          Identify and describe two (2) key differences between these fund designs.                (2 marks)

9c.    Superannuation contributions are broadly categorised into concessional and non-concessional contributions.     Answer the following questions to explain how these differ from each other.   (3 marks)

9d.   Identify the two (2) main options a superannuation trustee has available to manage the administration of the superannuation fund.

          Note: In this question, the fund is not part of a master-trust.                                                (1 mark)

QUESTION 10                                                                                                              (10 MARKS)

This question looks at the roles and responsibilities of the main regulators who oversee different aspects of the superannuation industry. It also considers the impact of legislation and provision of quality advice.

10a. Complete the table below to build a summary of the main regulators in the superannuation industry.   (6 marks)

	APRA	ASIC	ATO	AUSTRAC
What does each acronym stand for? (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>
What part of the industry do they regulate? (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>
Name the key legislation each regulator is responsible for enforcing. (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>
Briefly summarise the key requirement of the legislation you identified above. Focus on the effect the legislation has on superannuation funds and trustees. (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>
Licences issued (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>
For each regulator list two regular reports/documents that super funds need to submit to this regulator (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>

10b. Complete all details in the table below.                                                                                             (2 marks)

	Regulatory Guide 146	Prudential Standards	Superannuation Guarantee (Administration) Act 1992	Retirement Savings Account Act 1997
Explain the aim of each guidelines/law/standard (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>.
Which regulator administers it? (1 mark)	<type your answer here>	<type your answer here>	<type your answer here>	<type your answer here>

10c. One of the aims of FoFA was to improve the quality of financial advice given to retail clients. Explain what the ban on conflicted remuneration structures is and how it helps achieve this aim.         (2 marks)