General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
January 10, 2019

APRA welcomed the Productivity Commission’s final report on superannuation as an important step toward delivering better outcomes for members. The report assesses the efficiency and competitiveness of superannuation system in Australia and whether better ways to allocate defaults are needed. The report highlights that the assessment of the superannuation system reveals mixed performance and that the system needs to adapt to better meet the needs of a modern workforce and a growing pool of retirees. The assessment shows that inadequate competition, governance, and regulation have led to these outcomes.

The assessment finds that regulations and regulators focus too much on the interests of funds and not members. Sub-par data and disclosure inhibit accountability to members and government. Regulators need clearer roles, accountability and powers to confidently monitor trustee conduct and enforce the law when it is transgressed. APRA should focus more on matters related to licensing and authorization, ensuring high standards of system and fund performance. It should supervise and enforce the obligations of the licences and authorizations it grants, in addition to requiring all APRA-regulated superannuation funds to conduct formal due diligence of their outsourcing arrangements, at least every three years, to ensure the arrangements provide value for money. Each fund should provide a copy of the assessment to APRA and require all APRA-regulated superannuation funds to include a clause in material service contracts with outsourced providers that obliges the provider not to do or take any action that adversely affects members’ interests. In addition, APRA should:

  • Report annually to the Council of Financial Regulators on funds’ progress with implementing the elevated outcomes tests and on fund merger activity.
  • Undertake a systematic assessment of the costs to funds of the thousands of legacy products in the superannuation system. If the evidence demonstrates that they represent a significant cost in accumulation, APRA should further refine trustees’ obligations for member transfers so these products can be rationalized.
  • Embed product-level reporting within its reporting framework as soon as practicable (no later than 18 months) to enhance visibility of actual member outcomes across all APRA-regulated funds and to bring reporting for the choice segment into line with the MySuper segment. APRA should also expedite efforts to address inconsistencies in reporting practices.

The Australian Government should set an explicit "member outcomes" mandate for APRA in its regulation of superannuation. The report also recommends that the Australian Government should  initiate review too examine how efficiently and effectively APRA operates to achieve its strategic objectives in relation to superannuation and the review should be completed and published during 2019. Deputy Chair Helen Rowell said many of the findings and recommendations in the report aligned closely with APRA’s ongoing focus on ensuring superannuation funds delivered quality, value-for-money outcomes for their members. She said that APRA is already addressing many of the areas where the report indicated the organization could make changes or improvements. APRA would consider the Productivity Commission’s comprehensive report, together with the financial services Royal Commission’s final report and the Government’s subsequent response, as part of its review of priorities for supervision of the superannuation industry for the next few years.

 

Related Links

Keywords: Asia Pacific, Australia, Insurance, Superannuation, Productivity Commission, Prudential Framework, APRA

Related Articles
News

ECB Updates Validation Checks and List of Identifiers Under AnaCredit

ECB updated the AnaCredit validation checks (Version 1.4) and the list of national identifiers (version 2.4) for AnaCredit reporting.

March 21, 2019 WebPage Regulatory News
News

BCBS Publishes Results of the Basel III Monitoring Exercise

BCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018.

March 20, 2019 WebPage Regulatory News
News

EBA, FCA, and PRA Agree on MoU Template for Supervisory Cooperation

EBA, FCA, and PRA announced that they have agreed on a template for the Memorandum of Understanding (MoU) that sets out the expectations for supervisory cooperation and information-sharing arrangements between UK and EU/European Economic Area national authorities.

March 20, 2019 WebPage Regulatory News
News

EBA Publishes Reports Monitoring the Implementation of Basel III in EU

EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.

March 20, 2019 WebPage Regulatory News
News

HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of Banks

HKMA issued, in relation to the Financial Institutions Resolution (Loss-Absorbing Capacity Requirements—Banking Sector) Rules (LAC Rules) a chapter of a code of practice (LAC CoP) under section 196 of the Financial Institutions Resolution Ordinance (FIRO).

March 20, 2019 WebPage Regulatory News
News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News
News

US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy Swaps

US Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.

March 19, 2019 WebPage Regulatory News
News

HKMA Expects Banks to Manage Risks Related to Crypto-Asset Exposures

HKMA issued a statement announcing that it expects authorized institutions to take note of the BCBS statement on crypto-assets and its prudential expectations.

March 18, 2019 WebPage Regulatory News
News

SNB Issues Form on Solvency Risk of Counterparties in Interbank Sector

SNB released form (Version 5.00) and related documentation for reporting solvency risk of counterparties in the interbank sector.

March 18, 2019 WebPage Regulatory News
News

EIOPA Requests Data on LTG Measures from Insurers Under Solvency II

EIOPA has requested the European Economic Area insurance undertakings, which are subject to Solvency II, to provide information on the long-term guarantee (LTG) measures.

March 18, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2769