The House of Representatives standing committee on economics has scrutinised the super sector for raising concerns around liquidity amid the coronavirus-induced market meltdown.
The focus on liquidity is timely, given further market volatility, increased withdrawals through the early super release measure, increased member switching and reduced inflows from superannuation guarantee contributions as job losses roll through the country.
KPMG has said funds are set to see rebalancing challenges in light of illiquid investments and high sell spreads being introduced by managers – there will be a need for out of cycle and more frequent unlisted asset valuations, as conducted by AustralianSuper and IFM Investors.
But Tim Wilson, chair of the standing economics committee stated in its last round of the hearings, the super industry had dismissed concerns about liquidity associated with the structure of their funds.
“Considering the super funds are now claiming liquidity issues which is inconsistent with the spirit of evidence they had previously submitted, the committee is reserving its right to hold a hearing with APRA, and the superannuation sector in the interests of financial stability,” Mr Wilson said.
The committee has held hearings with the big four banks, the smaller banks and the super segment. It is yet to hear from the insurance and financial advice segments.
The committee has deferred hearings with the big four that were scheduled for 12 June and 26 June for later in the year.
The banks are still required to check in with written updates on their progress on implementing measures of the royal commission, as well as periodic updates on action they’ve taken in response to the COVID-19 pandemic.
“It remains important that the banks and other entities are held publicly accountable,” Mr Wilson said.
“However, the banks are fully occupied in responding to the COVID-19 pandemic. Therefore, it is prudent to defer the hearings until the situation improves.”
Public hearings with the insurance sector are scheduled for 28 and 29 April, but the committee has indicated it will decide if they will still proceed in early April.
Hearings with the financial advice sector will be scheduled for later in the year.
