POWERED BY MOMENTUM MEDIA
ASIC, APRA put trustees on notice over retirement strategies
ASIC and APRA have asked superannuation trustees to boost efforts to track and measure the impact of their strategies to improve retirement outcomes for members.
In a joint statement issued on Tuesday, the corporate regulator and the prudential supervisor revealed that a recent pulse check had found that “some significant gaps” still remain a year after the regulators first identified a lack of urgency among trustees in embracing the intent of the Retirement Income Covenant (RIC).
As part of a follow-up survey, the regulators collated almost 50 responses to the recommendations and findings from the thematic review, which found only incremental progress had been made to measure and track retirement income strategies.
The regulators also found that just eight trustees said tracking the effectiveness of retirement-focused assistance to members was a priority, while only one in five planned improvements identified by trustees to better understand members’ needs were expected to be completed by mid-2024.
“The most concerning finding from this survey is the lack of progress being made by trustees in tracking the success of their strategies, especially as this was highlighted as one of the key areas in need of improvement in the thematic review report,” said APRA deputy chair Margaret Cole.
“Without effective success metrics, how can trustees know that their strategies are working? Members deserve better.”
ASIC commissioner Simone Constant observed trustees have a “pivotal” role to play in improving the retirement outcomes for their members, with some 6 million Australians at or above superannuation preservation age in June 2023, and a further 3 million becoming eligible to draw from their super in the next 10 years.
“Pleasingly, trustee responses to the survey indicate they are pushing ahead with work to refine their strategy implementation,” Constant said.
“However, we expect trustees to assess gaps and identify opportunities to accelerate progress in closing these gaps, including by leveraging examples of progress outlined in this industry update.”
Since the thematic review in 2023, a number of trustees cited better practices on the RIC, including providing retirement-specific information to members through targeted cohort communications, email nudge programs, and pre-retirement guidebooks and checklists; and establishing retirement-focused leadership roles and teams.
However, they also pointed to a number of challenges in implementing the covenant. These include the ability to meet members’ retirement advice needs, given the uncertainty around the financial advice framework; a general lack of member engagement and financial literacy regarding their superannuation and retirement phases; and privacy, security, and cost concerns on collecting more member data.
APRA and ASIC flagged that “continued focus on the retirement phase is critical”, given the number of members moving into the retirement phase in future years and the growth of account balances transitioning into retirement.
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
Recommended for you
Superannuation funds are stepping up their cyber security efforts as reliance on digital infrastructure exposes them to growing risks of cyber attacks, according to new research from JP Morgan.
It seems the government is still determined to push through its controversial super tax legislation, according to its Tax Expenditures and Insights Statement released today.
Bitcoin’s recent surge above US$105,000 has fuelled predictions of a continued monumental rise, yet many Australian super funds remain hesitant to dive into the world of digital assets, with one fund admitting it is keeping an eye on the space.
Large super funds are at the forefront of setting standards for the governance of unlisted asset valuations, according to the Australian Prudential Regulation Authority (APRA).
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
