New APRA Consultation on Superannuation Governance Proposals

On 11 August 2017, the Australian Prudential Regulation Authority (APRA)  released a letter to superannuation trustees outlining proposed changes to the superannuation prudential framework to lift operational governance practices of APRA-regulated superannuation trustees (RSE licensees).

Helen Rowell, APRA Deputy Chairman, said APRA had identified areas for improvement in some RSE licensees, to better reflect evolving industry best practice and public expectations.

“The superannuation industry is going through a period of significant evolution and it is incumbent on RSE licensees to be focused on meeting the best interests of members through delivering high quality, value for money member outcomes. This extends to RSE licensees making decisions about the use of members’ money in a manner that provides appropriate transparency and accountability, and is demonstrably in the best interests of members,” Mrs Rowell said.

APRA will consult with the industry over coming months but has highlighted the following proposed changes:

  • requiring RSE licensees to have an operational governance framework, which covers the policies and processes that support strategic and business planning, and ensure rigour in operational decisions, particularly those related to expenditure and reserving;
  • expanding the existing business planning requirements to ensure RSE licensees appropriately implement, monitor and review their business plans in the context of clear strategic objectives;
  • requiring RSE licensees to meet minimum expectations when making decisions on fund expenditure, with a view to ensuring there is adequate rigour in decision-making, monitoring and transparency related to the use of members’ money; and
  • requiring RSE licensees to undertake an outcomes assessment for all members. APRA expects to provide guidance to support this assessment, including the proposed MySuper outcomes assessment.

The letter  to RSE licensees is available on APRA’s website at: www.apra.gov.au/Super/Publications/Pages/other-publications-for-superannuation-entities.aspx

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