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APRA urged to validate outcomes test metrics
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.”
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