Victorian senator and economics legislation committee member Bridget McKenzie asked a series of questions on notice to the prudential regulator around the collection of data for super fund performance tests under the new rules, which would see funds prevented from accepting new member money if they failed performance tests multiple times.
“Can you assure this committee that APRA has all the required data for including administration fees in the performance assessment, for every MySuper fund that will be assessed? Is that all administration fees, expenses and costs paid from reserves?” Senator McKenzie asked.
“ASIC RG97 (fees and cost disclosure) requires funds to disclose ‘costs paid from reserves’ by 30 September 2022. Until then, is there a gap in APRA’s historical MySuper fee data for some funds?”
The issue of member reserves being used to pay costs such as remediation has been raised in previous parliamentary committees, with Liberal MP Tim Wilson questioning ASIC on the legalities of member funds being used in this way.
The recent reforms have placed tighter restrictions on the ways funds can use member money for non-investment-related activities, but the prudential regulator said the issue was currently not factored into fund cost structures since new reporting rules around reserves did not come into force until 2022.
“APRA is confident that it will have all the required MySuper data to administer the performance test and is currently undertaking the necessary steps to ensure this is the case,” the regulator said.
“Under legislation, data relating to the payment of fees from reserves is not currently required to be included in administration fees, therefore APRA does not consider this data to be ‘missing’.”
The specifics of the Your Future, Your Super performance test methodology has been a sore point among different sectors of the super industry, with industry and retail funds last week disagreeing around the merits of the use of one year’s worth of administration fees as a cost benchmark in the tests.
APRA said it was “working closely with Treasury and the government” in regard to the reforms.
“This includes some discussions in relation to data required for the performance test. APRA has advised the Treasury that it is confident that data required to undertake the performance test in 2021 will be available within the necessary timeframe,” the regulator said.