Superannuation funds that do not deliver consistent and sustainable outcomes for their members will be encouraged or even forced to make “fundamental changes” to their operation, APRA has said.
Speaking at the 2017 ASFA conference in Sydney on 29 November, APRA deputy chairman Helen Rowell explained the regulator’s current proposals to change the prudential framework were designed to “put pressure on poor performers”.
“The strategic and business planning proposals should prompt trustees to ask the most important questions first,” Ms Rowell said.
“What are their strategic objectives, and how are they going to deliver sound outcomes for members? Trustees must then translate those objectives into action through their business plan, and be clear about how those actions will be funded using fund assets or other sources of income.”
Funds that are identified (or self-identify) as being unable to “consistently deliver sound and sustainable member outcomes” will be encouraged to change their operating model and potentially merge with another fund, Ms Rowell said.
Ms Rowell additionally noted that if the proposed ‘directions power’ currently before Parliament is granted, APRA would have the ability to enforce such changes if necessary, but that the regulator would prefer funds manage these changes themselves.
“If granted, this is a power I would prefer APRA only had to use very rarely, if at all. APRA’s preference is always for trustees to determine their own destinies,” she said.
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