Consumer advocates have welcomed the Australian Prudential Regulation Authority’s decision to publish more detailed expense and investment data for super funds, saying the heightened level of transparency helps determine where to “apply the pressure”.
In a letter to trustees late last month, the regulator said it would start publishing non-confidential data under several expense and asset allocation reporting standards.
The move follows an industry consultation by APRA last year, and the new expenditure data will be published from August.
The items that will be made public include administration costs, marketing, promotion and sponsorship, union-related expenses, director and executive remunerations and political donations.
“I think it’ll be telling when the data is actually released, and we get to see where the expenditure is and then apply the pressure,” Super Consumers Australia director Xavier O’Halloran told Investment Magazine.
At a time when marketing activities could lead to compliance and regulatory issues – referring to the recent high-profile dispute between Hostplus and employee onboarding platform Employment Hero – O’Halloran said it’ll be great to know exactly where the money is going.
“We can then link that back to if it [marketing expense] is actually having the desired effect. Is that money being spent for member growth – something we hope would lead to economies of scale, improved benefits and lower fees for all members of a fund?” he said.
“It’s an important thing to highlight whether that marketing expenditure is really being wasted.”
‘Shed further light’
APRA deputy chair Margaret Cole said the regulator is pleased with the industry’s “broadly supportive” response.
“The new data will shed further light on how trustees are spending and investing the funds entrusted to them by members,” she said.
However, some super funds were concerned that the expense disclosure could cause confusion across different reporting regimes.
For example, while promotions, marketing and sponsorship reports for a fund’s Annual Member Meeting (AMM) are on a cash payment basis, those under APRA’s reporting standard ‘332 Expenses’ are on an accrual basis.
One submission to the consultation highlighted concerns that advertising, marketing and sponsorship are open to interpretation and that could affect the comparability of data.
In response, APRA has agreed to provide more context around potential reporting differences, but said it expects transparency on fund’s classifications to improve the consistency of reporting over time.
On the investment front, APRA is looking to publish more data on assets held by super funds.
These include property and infrastructure, listed equities, alternatives and private equity. However, several submissions warned that publishing option-level data could reveal a fund’s proprietary investment strategy information.
While these publications from APRA will likely be industry-focused, O’Halloran said the regulator should make them more consumer-friendly down the track.
“[Being industry-focused] is not necessarily a bad thing, there’s detailed information that’s important to still release but might not all be relevant to members.
“It’s our job and the media’s job as well to help explain it to the public ultimately.
“But at the same time, it’s always good for regulators to be thinking… that the data that’s being released is stuff that consumers can actually act on and take into account when they’re picking where to invest their retirement savings.”
