POWERED BY MOMENTUM MEDIA
Super funds baulk at operational risk reserving
Major superannuation funds have questioned why they should have to retain at least 0.25 per cent of their funds under management to meet Australian Prudential Regulation Authority (APRA) operational risk financial requirements (ORFR).
The concern of the major funds has been revealed in a submission from the Association of Superannuation Funds of Australia (ASFA) which told APRA that some of its member funds had expressed concern that the requirement results in a significant amount of money “effectively being quarantined”.
Further it said the “quarantined” money was in most instances going to be invested conservatively and was likely to be in addition to other reserves held within the fund such as administration or insurance reserves.
“Accordingly, they have questioned whether the ORFR, set at 25 basis points of FUM, is always in the best interests of members and noted that the amount of money set aside to meet the ORFR will continue to grow to such an extent that it may be difficult to justify the quantum involved,” the ASFA submission said.
“In addition, some member funds have expressed the view that the permitted use of the ORFR, to remediate losses from members’ accounts, is too restrictive and that the use of the ORFR should extend to other remediation costs, such as the cost of professional/expert support which is usually required to investigate, report, advise on and resolve issues.
“The view was expressed that the industry will be keen to see whether anyone has made use of the provisioning, and in what circumstances, and that some guidance for the industry from APRA could be useful.”
Recommended for you
Governor Michele Bullock took a more hawkish stance on Tuesday, raising concerns over Donald Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
