In an effort to "maintain industry momentum", the prudential regulator has finalised new superannuation requirements before they have been legislated.
The Australian Prudential Regulation Authority (APRA) has today released a package of new and enhanced prudential requirements designed to strengthen the focus of registrable superannuation entity (RSE) licensees on the delivery of quality outcomes for their members.
A central component of APRA’s new framework is the introduction of an outcomes assessment that will require RSE licensees to annually benchmark and evaluate their performance in delivering sound, value-for-money outcomes to all members – covering both MySuper and choice products.
APRA deputy chairman Helen Rowell said APRA was committed to lifting standards across the industry for the long-term benefit of superannuation members.
“As the prudential regulator, APRA’s primary focus is on the sound and prudent management of the $1.8 trillion APRA-regulated segment of the superannuation industry; that includes seeking to ensure that RSE licensees meet their obligations to put their members’ interests first,” Mrs Rowell said.
“These changes to the prudential framework set a higher bar for RSE licensees by requiring a robust assessment of the outcomes delivered for members to be reflected in their strategic and business planning.”
In addition to the outcomes assessment, APRA’s final package requires RSE licensees to meet strengthened requirements for strategic and business planning, including management and oversight of fund expenditure and reserves. These requirements are set out in new Prudential Standard SPS 515 Strategic Planning and Member Outcomes.
The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No.1) Bill 2017 (the Bill) that is before Parliament would, if passed, introduce a legislated outcomes assessment.
APRA said its proposals are consistent with the outcomes assessment proposals in the Bill, and are being introduced now to "maintain industry momentum" towards delivering improved outcomes for members. APRA will review whether amendments are needed to the prudential framework requirements if the Bill is passed by Parliament in future.
Mrs Rowell also emphasised APRA’s strong support for the other reforms contained in the Bill and, in particular, the enhanced directions powers for APRA, the strengthened MySuper authorisation and cancellation provisions, and the requirement for APRA to approve changes of ownership of RSE licensees.
“These new policy proposals address weaknesses in the current superannuation regulatory framework and would greatly assist APRA in driving the superannuation industry towards addressing underperformance and improving member outcomes,” she said.
APRA’s finalised package of measures is the culmination of extensive industry engagement that commenced in August 2017, and includes amendments to the original proposals taking into account the feedback received during consultation.
The commencement date for the new measures has been set as 1 January 2020, to provide industry with sufficient time to meet the new requirements.
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