Superannuation data standard flawed by contributions loophole
A loophole in the superannuation data and payment schedules standards could encourage employers to misuse an exception for contributions over-payments, the Association of Superannuation Funds of Australia (ASFA) has warned.
It called for a total ban on employers exploiting the standard which deals with over-payments, to prevent them using negative contributions amounts and mutual funds.
"ASFA has concerns that, although there is a clear statement that 'over-payments are not catered for within the scope of the standard and MUST be managed via other processes as agreed between the relevant parties', the standard then goes on to describe that this can be done by mutual agreement and through the use of negative contribution amounts," its submission to the Australian Taxation Office said.
Employers could take unilateral action to use negative contribution amounts and wreak havoc on processing and administration operations, according to ASFA.
Allowing mutual agreements could lead to a proliferation of exceptions and a varied array of arrangements, and could undermine the concept of having a standard to begin with.
The ban should apply to accumulation funds, ASFA said, although it acknowledged the Stronger Super SuperStream Working Group's agreement to allow exceptions in the case of employers contributing to a defined benefit scheme.
ASFA said the industry should nut out an agreed process for employers who seek to have overpaid contributions returned.
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