Australians’ retirement savings become more vulnerable as they move into decumulation and ASIC and APRA have warned trustees that they must be extra vigilant in protecting members against fraud, scams and cyberattacks.

Withdrawals in the decumulation phase, and the systems and processes funds put in place to facilitate them, represent potential weak points in the system that can be targeted and exploited.

These processes and systems potentially represent weak points in the system that can be targeted and exploited.

APRA deputy chair Margaret Cole told Investment Magazine Chair Forum that funds must be “especially vigilant about the cyber-risk to assets sitting in retirement-phase products”.

“This time of life, and this situation, provides greater avenues for funds to withdraw from the superannuation system, and the risks are higher,” she said.

“Operational risk events such as system outages and cyber threats are what might immediately spring to mind when you think about expecting the unexpected. But investment risk related events can also have very serious consequences, and inadequate response by trustees to market disruptions and liquidity events could have a significant adverse impact on the financial system and on member outcomes.”

Cole said that in her time at APRA the regulator has become “much more muscular in [its] use” of tools, includingby imposing license conditions on trustees, and that funds should expect this approach to continue as retirement-phase savings mount.

“Your fund members should be able to expect that their retirement savings are in safe hands, that their personal data is protected and that their account-based pension payments will come through on time,” Cole said.

She said that “if some unexpected event were to beset their fund”, members should know that trustees would have robust governance, risk management and processes in place to support their best financial interests.

“That means acting in members’ best interest in everything you do, the strategies you set, how you invest and spend money, how you manage risks, and how you support members through their working and retirement lives.

“Robust trustee board governance is critical to your funds’ resilience to withstand adverse events and keep members safe. And in this way, good governance underpins trust in the system.”

ASIC Commissioner Simone Constant said that with $4.5 trillion in assets, superannuation is already a highly attractive target for bad actors.

“It also means it now comes with very big obligations, and if you are to meet these big obligations to members and to markets, your size means you actually need to think differently now about your role in the system,” she said. In a few short years the industry will be $6 trillion, “which is more or less where the banks are today”.

“So it’s not a moonshot to say that super will one day be, and one day not too far away, the biggest part of our economy. That will make you stewards of more than Australia’s retirement future, but of our economic future too – custodians of stability and confidence.”

Constant said ASIC’s regulatory priorities will continue to focus on how funds support members in retirement andhow they are meeting their Retirement Income Covenant obligations.

“Our priorities… in superannuation are largely consistent with our priorities from last year, because there’s more to do; and in fact, there’s more that we’re concerned about when it comes to supporting better outcomes in member services and in retirement,” she said.

“We will also continue with a commitment to disrupt harmful superannuation switching behaviours, and we will hold trustees accountable for ensuring the Retirement Income Covenant finally moves beyond implementation to delivery for the benefit of those four million people who will be in retirement phase of super over the next decade.”