Telstra warns Govt on corporate super unintended consequences
Has the Government’s moves to extend the Financial Accountability Regime (FAR) to the superannuation industry made delivering corporate superannuation schemes unattractive to big corporates?
If one of Australia’s largest corporates, Telstra, is any guide then the answer may be ‘yes’.
Telstra has gone to the trouble of filing a submission with the Senate Economics Legislation Committee arguing that there needs to specific amendments to the Government’s Financial Accountability Regime Bill 2021 to make sure that a companies which sponsor corporate super schemes are not rolled into the FAR regime.
The Telstra submission says that while the company is, indeed, the principal employer behind the Telstra corporate superannuation scheme, TelstraSuper, Telstra’s business activities are totally separate from the running of the scheme.
“We are concerned that the current draft legislative provisions may give rise to a potential interpretation that Telstra may be a significant related entity of the Trustee,” the Telsra submission says. “Whilst our internal assessment is that this is not the case, we note that the current draft provisions could potentially give rise to Telstra becoming subject to the FAR regime. We feel that this is an unintended consequence of the Bill and is not within its intended scope.”
“In this regard, TelstraSuper is a corporate superannuation fund. Its parent company, Telstra, operates in the telecommunications sector and is not an APRA regulated entity.”
Telstra says it owns 100% of the share capital in TelstraSuper, “however in our assessment Telstra’s business or activities do not have a material and substantial effect on the Trustee.”
In this regard:
- As to the nature and scale of Telstra’s activities, Telstra primarily operates in the telecommunications industry and its type, size of business and extent of activities in that industry have no relevant impact on the Trustee.
- The degree of interdependency between the Trustee and Telstra is limited. Telstra has a role in nominating some of the Trustee directors, although their appointment is a decision of the Trustee. Telstra also has a role in making regular contributions to the fund. However, this only relates to those Fund members who are current Telstra employees. Furthermore, the Trustee is subject to a covenant to act in the best financial interests of Fund members and may not be subject to direction by Telstra in the exercise of its duties.
- In terms of organisational, financial or administrative arrangements between the Trustee and Telstra, there are no significant arrangements in place. The Trustee operates independently of Telstra in an organisational, financial and administrative sense, aside from Telstra’s role as shareholder and contributing employer. Telstra is not involved in the Trustee’s day to day decision-making.
The Telstra submission recommends that, for the avoidance of doubt, the legislation be amended to clearly exclude employer sponsors of corporate super funds from the definition of “significant related entity”.