APRA has set out its superannuation policy priorities for 2019, though some of them depend on action by the Government and the Parliament.
APRA has released its annual Policy Priorities document, which outlines areas of policy focus over the next year and a half – including on superannuation.
In the first half of 2019 APRA plans to finalise its post-implementation review of the superannuation prudential and reporting frameworks. This includes the effectiveness of the Stronger Super reforms from 2013, along with issues raised by the Royal Commission and Productivity Commission.
“Findings that support changes and improvements to the framework will be consolidated into a package of consequential policy changes,” says APRA. “As part of this work, APRA will also review its guidance on the Sole Purpose Test.”
APRA plans to consult on enhancements to superannuation data collection in the second half of 2019, extending into the first half of 2020. This is, in part, driven by recommendations of the Productivity Commission inquiry into superannuation.
“Transparency on fees, expenses and investment returns, among other things, is crucial to allow APRA, industry and the public to understand performance of the superannuation sector and of individual funds,” says APRA.
Action on broader recommendations from the Productivity Commission depend on decisions by the Government.
“The significant recommendations of the Productivity Commission, including those relating to default fund selection and the elevated member outcomes assessment, if adopted by the Government, will require legislative change and consequential changes to prudential standards. APRA will work with Government to determine the scope and timing of this work, if it is to go ahead.”
Strengthening superannuation member outcomes will be implemented in the first half of 2020 – the target effective date is January 2020. Though this will vary based on the passage of legislation.
The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2019 is currently before the Parliament. It includes increased powers for APRA and a requirement for super fund trustees to conduct an annual outcomes assessment – determining if the financial interest of members are being promoted.
“APRA has welcomed the legislation, which it has sought for some time to enable APRA to take timely and effective action on superannuation trustees and funds that are not meeting their obligations,” said APRA.
The Bill has passed the Senate, but as it was introduced there first it now needs to get through the House. Few sitting days remain ahead of an expected May election.
Last year APRA moved on its own to introduce a member outcomes assessment. APRA says the Bill is “broadly consistent” with its approach, but some technical changes and consultation will likely be required.
APRA will consult on changes to prudential standards in the second half of 2019, followed by finalisation in the first half of 2020 – ahead of a target effective date of 2021.