APRA’s regulatory priorities for the super fund industry include improving member outcomes, how trustees are implementing the retirement income covenant and improving industry practices according to deputy chair Margaret Cole.
“One of APRA’s most important policy priorities in superannuation this year is to improve member outcomes more broadly through updates to the standard [SPS 515],” said Cole at the Investment Magazine Chair Forum in Healesville earlier this week.
APRA has proposed a number of changes to SPS 515 that requires trustees to evaluate their performance in delivering quality outcomes to members. These include tightening requirements to make sure trustees deliver quality outcomes to members in a more measurable way, increasing board supervision of financial projections and closer monitoring and management of financial resources to better reflect the risk profile and nature of the business. Also making sure trustees take prompt action to improve areas of underperformance including transferring members to better performing products or funds.
Another key priority is to correct substandard industry practices, focusing on strategic planning and member outcomes, fund expenditure and unlisted asset valuation practices.
“We will continue our scrutiny of business models that are challenged in delivering long-term sustainable, competitive outcomes for members,” said Cole.
She acknowledged the value of the annual performance, notwithstanding the review currently undertaken by the government and urged trustees not to delay examining the performance of all their products and the fees charged. “Regardless of the outcomes from the review, performance and sustainability will remain a key focus of our supervisory work, so don’t sit back and wait,” she said.
Retirement in focus
The regulator is also prioritising retirement income as more Australians move into the decumulation phase. “Since coming into effect in July last year, the retirement income covenant has sharpened the industry’s focus on the post-accumulation phase of superannuation. This is a welcome development for the many Australians who are nearing retirement,” she said.
APRA and ASIC are currently jointly undertaking a review of how a sample of trustees have implemented the retirement income covenant within their business strategies and operations for the benefit of members.
Cole also reminded trustees about the need to focus on cyber risk after the Optus and Medibank data breaches last year as stolen member data would increase the risk of fraud on super funds. APRA is working the ATO, ASIC and an industry working group to examine the risk and work to raising risk controls she said.
“The availability of stolen personal data has increased fraud risks that superannuation funds face in terms of protecting the integrity of their members’ superannuation accounts… We believe this is important work and are encouraged by the collaborative approach being taken,” she said.