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More Super Transparency

Friday 21 October 2022

The prudential regulator is bringing more transparency to superannuation. 

The Australian Prudential Regulation Authority (APRA) indicated the increased transparency  as part of their superannuation Data Transformation  reporting standards.

APRA Member Margaret Cole said in an official statement,  “This milestone publication reflects the progress APRA has made to improve the breadth, depth and quality of industry data as part of our multi-year Superannuation Data Transformation project.”

Recently,  APRA Chair Wayne Byres spoke more generally about the need and driver and need for more transparency in the superannuation industry post the financial services royal commission:
During the Royal Commission, Counsel Assisting Michael Hodge KC posed the question: “What happens when we leave these trustees alone in the dark with our money?” It was a very good question. Given the weak accountability that most superannuation trustees are subject to by virtue of their ownership structure and limited member engagement, corporate interest and self-interest can sometimes outweigh member interest. Transparency has been key to increasing the discipline on trustees to ensure they are always managing members’ money in their (i.e., members’) best interests. 

The recent publication includes swathes of new critical information. 
The regulator said in an official statement this week, “For the first time, published data includes information on the number and types of products and investment options available in the superannuation industry. It also includes quarterly data on member demographics, such as gender, age, and account balances, which were previously only published annually, as well as improved classification of MySuper product asset allocations.”

Super Test Cleaning up the industry
 Research from the consumer action group Super Consumers has found that the super performance has forced funds with poor performing products to slash their fees and those that have failed their tests are seeking to address their underperformance  but more needs to be done.

Super Consumers Australia Director Xavier O’Halloran, “Now is the time to extend these clear benefits to people with their super in the untested choice segments of the market. The regulator’s most recent data on performance in this segment found that more than 60% of the investment options had failed to meet a heatmap benchmark. So, there is clearly still work to do to clean up underperformance in the super sector.”

O’Halloran also suggests that the bar for the test needs to be raised.

“The Productivity Commission outlined the test was designed to remove the tail of underperformance. The next step is to drive healthy competition among funds at the top end of the market. A lot can be achieved through improvements to the comparison tool and helping people to either default into or select high performing funds when they change jobs or enter the workplace.”