Submission on strategic planning and member outcomes: Proposed enhancements
CA ANZ and CPAA generally welcome the proposed focus of this review by APRA on simplification, cohesiveness, integration with other prudential requirements, improved outcomes orientation and degree of understandability and navigability.
In brief
- We re-iterate concerns raised by us in previous submission to APRA and Treasury in relation to the retirement income covenant.
- Fees should not be a ‘race to the bottom’ as improved outcomes to members should be the focus.
- We note that parts of the proposals included in the chapter Assessment of Performance are being examined as part of the YFYS review.
This paper covers proposed enhancements to Superannuation Prudential Standard (SPS) 515, relating to defining quality member outcomes, running the Registrable Superannuation Entity (RSE) licensee’s business in a financially and operationally sound and sustainable manner, assessing performance and taking timely and appropriate action to address areas of underperformance.
In chapter, ‘Clearly defining outcomes for members’, we consider that comprehensive assistance to RSE licensees will provide better results when identifying cohorts for the purposes of executing a fund’s retirement income strategy. We also believe that it will provide further clarity to trustees in relation to situations outside of regulatory and legislative requirements, such as examination of gender pay gap, disability and insurance matters and understanding the needs of members in non-standard employment situations.
In chapter, ‘Soundly run business’, CA ANZ and CPA Australia provide no comments in relation to the proposals around managing financial resources and understanding financial projections, other than to note these proposals are reasonable.
However, we consider that proposals in relation to fee-setting principles could be an opportunity for RSE licensees to understand fees being charged to investments by third parties which are not negotiated directly by trustees. We look forward to the consultation on expenditure management, to be undertaken in 2023.
CA ANZ and CPA Australia note that parts of the proposals included in the chapter, ‘Assessment of performance’, are already being examined as part of the YFYS review. We have written at length about the problems faced by funds whose performance test is affected by the use of inappropriate benchmarks. We have raised our concerns at every step of consultation in relation to the legislation of performance test treatment of faith-based products, as well as in our submission to the YFYS review.
CPA Australia and CA ANZ note the proposed consultations in the chapter, ‘Take meaningful action’, related to transfer of members, contingency planning and successor fund transfers. We plan to respond to these when they are undertaken and have no comments at this stage.
