APRA proposed revisions to the prudential standard SPS 250 on insurance in superannuation. SPS 250 establishes requirements for registrable superannuation entity (RSE) licensees with respect to making insured benefits available to beneficiaries. The proposed changes to SPG 250 are aimed at improving superannuation member outcomes by helping trustees select the most appropriate policies for their members and monitor their ongoing relationships with insurers. The consultation ends on February 03, 2020 and APRA is expected to finalize SPS 250 by mid-2020. The revised standard will come into effect on January 01, 2021.
APRA has proposed that certain transitional requirements will commence on the date of registration of revised SPS 250 (anticipated to be in July 2020), with the remaining requirements to commence on January 01, 2021. The proposed revisions will require:
- a process that enables beneficiaries to easily opt-out of insurance cover
- that the level and type of insurance cover not inappropriately erode the retirement income of beneficiaries
- that any status attributed to a beneficiary in connection with the provision of insurance is fair and reasonable (Royal Commission Recommendation 4.15)
- independent certification that insurance arrangements are in the best interests of beneficiaries (Royal Commission Recommendation 4.14)
APRA decided to update SPS 250 following the post-Implementation review of the superannuation prudential framework. The review recommended enhancements to the APRA requirements and guidance on the strategy, design, and selection of insurers and how these affect member outcomes. The proposed changes also respond to two of the recommendations from the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry Final Report. The insights from this consultation will also form the basis of a revised Prudential Practice Guide SPG 250 on Insurance in Superannuation, which APRA will consult on early next year.
Comment Due Date: February 03, 2019
Effective Date: January 01, 2021
Keywords: Asia Pacific, Australia, Insurance, Superannuation, Pensions, Royal Commission Recommendations, SPS 250, APRA
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