The Australian Prudential Regulation Authority (APRA) has announced it is seeking to make changes to its standard governing strategic planning and member outcomes in superannuation.
First released in 2018, Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) requires super trustees to evaluate their performance in delivering quality outcomes to their members.
It also forces trustees to consider whether they will continue delivering quality outcomes in the future and to take steps to address any areas requiring improvement as part of their annual business performance reviews.
“SPS 515 sought to instil in superannuation trustees a culture of continuous improvement, where even the best performers are always looking for ways to further improve outcomes for members,” said APRA member Margaret Cole.
APRA said that, since the prudential standard came into effect at the start of 2020, the pace of change within the industry, and its regulatory and legislative settings, along with its observations of how the standard has been operating, had prompted it to revisit SPS 515’s design.
In a discussion paper released on Monday, the regulator proposed a number of changes to the standard, including strengthening requirements to ensure that trustees deliver quality outcomes to all cohorts of members in a more measurable way.
It also called for greater board oversight of financial projections as well as closer monitoring and management of financial resources in an integrated way that better reflects the risk profile and nature of their business.
Additionally, APRA proposed changes that would ensure timely action is taken to address areas of underperformance, which may include transferring members to better performing products or funds.
“While we have seen clear evidence that SPS 515 has contributed to greater efficiency in the industry, increased consolidation and better outcomes for members, there is still more to do,” commented Ms Cole.
“In particular, as the industry’s approach to SPS 515 matures, we are less interested in seeing their plan on paper, and more interested in seeing evidence that it’s working in members’ best financial interests.”
APRA’s discussion paper is open to submissions up until 11 November, with draft enhancements set to be released early next year for a further round of consultation.
