Superannuation fund managers should pay more attention to the after-tax outcome for members, according to PricewaterhouseCoopers partner Marco Feltrin.
"Should pension money be managed differently in the accumulation phase compared to the pension phase? The answer to that question depends on whether you are managing on an after-tax basis. And we all know you should," Feltrin said.
Many fund managers have argued it is impossible to manage investments on an after-tax basis because the circumstances for each super member are different and, therefore, the impact of taxation is different.
But Feltrin, who spoke at the annual Australian Super Investment Conference on the Gold Coast this week, said regulators were increasingly taking the view that superannuation funds should address the issue.
He said the Australian Prudential Regulation Authority (APRA) had indicated in conversations with him that it expected super funds not to ignore the effects of taxation, but have a clear process in place to address the issue.
"APRA says you need to do something about it and document it," he said.
He also said the recommendations of the Cooper review emphasised a greater focus on after-tax results for members, which could spark further government scrutiny of the issue.
Feltrin gave an example of how after-tax strategies could help members by timing the transition from accumulation to pension.
In some cases, members have substantial tax liabilities that will fall away during retirement because pensioners are exempt from capital gains tax.
Transitioning them slightly earlier than planned could leave them with a higher balance in retirement.
