The prudential regulator has written to the chair of every superannuation fund in the country inviting their feedback on new rules designed to facilitate more industry consolidation.
On Thursday November 24, the Australian Prudential Regulation Authority (APRA) released a draft version of its new guidance for superannuation trustees in the process of shutting down or merging a fund.
Draft Prudential Practice Guide SPG 227 Successor Fund Transfers and Wind-ups (draft SPG 227) replaces previous APRA guidance on successor fund transfers and wind-ups.
The new guidance is intended to assist registrable superannuation entity (RSE) licensees in carrying out a successor fund transfer when they have decided that to do so is in the best interests of their members.
Draft SPG 227 also includes new guidance in the key areas of ‘equivalent rights’ in a successor fund transfer, transfers between MySuper products and considerations for the operational risk financial requirement in undertaking a successor fund transfer.
“The introduction of MySuper products in 2013-2014, as well as ongoing consolidation and other recent developments in the superannuation industry, have introduced additional complexities for RSE licensees in undertaking a successor fund transfer,” APRA deputy chair Helen Rowell said.
“APRA has therefore revised its guidance to assist RSE licensees where a successor fund transfer is being considered.”
Rowell said the new guidance was in line with APRA’s “ongoing focus on sustainability”.
She has previously flagged that APRA is concerned that there remain too many funds that are not capturing sufficient economies of scale for their members, or are at risk of not being able to continue to do so in the future.
The updated guidance covers issues such as best practice processes for determining whether a fund transfer or merger, how to execute these transactions in members’ best interests, and identifying and managing conflicts of interest.
Submissions close February 17, 2017.
The regulator said it intended to issue update guidance by mid-2017.