APRA urged to validate outcomes test metrics

13 December 2018
| By Mike |
image
image image
expand image

Major consultancy, KPMG has urged the Australian Prudential Regulation Authority (APRA) to provide superannuation funds with more specifics to enable them to better measure themselves with respect to the member outcomes test.

Responding to APRA’s release of prudential requirements around the outcomes test this week, KPMG said it remained supportive the proposed member outcomes assessment, which it believed would continue to drive better fund performance and overall outcomes for members.

However, it suggested that more detail required, with KPMG Superannuation Advisory partner, Adam Gee expressing concern that the specific metrics for the outcomes test remained to be mandated.

“As outlined in our submission to the Productivity Commission, KPMG believes that, rather than the use of a ‘Best in Show list’ for the selection of default funds, the member outcomes test could be utilised to determine which funds should be eligible to accept default contributions going forward,” he said. “This could be akin to an ‘elevated MySuper license’ for the better performers in the industry and would ensure that those members that do not make an active choice remain protected.”

However Gee noted that, whilst the proposed SPS515 required trustees to assess their fund’s performance across a range of criteria, KPMG remained concerned that the specific metrics that were initially outlined in SPS225 to assess outcomes had not been mandated within the latest prudential standard. 

“Our preference would have been for APRA to prescribe the metrics that funds should use to assess member outcomes to ensure a consistent approach is utilised and to remove the potential for gaming of the outcomes test, similar to the practice that has surrounded the scale test to date,” he said. “This would ensure that funds can easily benchmark their performance against the broader industry to determine whether they are truly delivering improved member outcomes relative to alternative funds available in the marketplace.”

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

1 year 6 months ago
Kevin Gorman

Super director remuneration ...

1 year 6 months ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

1 year 6 months ago

Economists from the big four banks have all predicted the RBA to deliver another rate cut during its July meeting; however, some admit the decision will be a close call....

2 hours ago

AMP’s strong 2024–25 returns were anything but a fluke – they were the product of a carefully recalibrated investment strategy that began several years ago, when the fund...

2 hours ago

ASIC is “considering what options” it has to hold super trustees to account for including the failed schemes on their platforms, according to its deputy chair....

2 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
5