POWERED BY MOMENTUM MEDIA
Super funds face heavy APRA workload
Superannuation funds have learned the degree of extra work they will need to take on to meet the Australian Prudential Regulation Authority’s new member outcomes test requirements including benchmarking outcomes across almost all outputs, including superannuation.
The regulator has finalised changes to its requirements with APRA deputy chair, Helen Rowell also announcing that all superannuation fund licensees would also have to perform an annual Business Performance Review to assess whether they were delivering sound, value-for-money outcomes for members.
“Where the legislated outcomes assessment requires RSE licensees to assess member outcomes at a product level at a point in time, APRA’s Business Performance Review also requires them to assess outcomes across a broader range of metrics for different member cohorts,” she said.
“Further, licensees must consider whether they will continue to deliver quality outcomes for all their members into the future, and take action if they identify areas needing improvement.”
But it is the detail contained in APRA’s Prudential Practice Guide 516 which will gain most attention from superannuation fund boards and executives because of the degree of detail it dictates with respect to benchmarking everything from investment returns through to fees and costs to insurance and retirement products.
However, the Practice Guide at least acknowledges that insurance benchmarking may prove difficult because of the unique nature of the products.
The Practice Guide said that the factors APRA regarded as relevant to analysis included, but were not limited to:
- the investment strategy set under Prudential Standard SPS 530 Investment Governance;
- insurance arrangements;
- options, benefits and facilities provided to members, including the availability of employer subsidised fees to certain member cohorts;
- the fee structures adopted by the RSE licensee;
- the scale of the RSE licensee’s business operations; and
- the costs incurred by the RSE licensee to operate and manage its business operations.
“APRA expects that an RSE licensee would detail a factor’s impact on the results of the performance analysis, including quantifying the impact where possible.”
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
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
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
