APRA-regulated superannuation funds

APRA has concerns over super fund conflicts of interest

APRA, conflicts of interest, RSE licensees (Registrable Superannuation Entity), super fundsAPRA has written to RSE (Registrable Superannuation Entity) licensees with concerns around the management of conflicts of interest.

The letter reveals that in 2014 APRA conducted a review to “assess how the superannuation industry was implementing SPS 521 [Superannuation Prudential Standard: Conflicts of Interest] requirements relating to managing conflicts of interest.”

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Report links industry super fund performance with governance

Industry super fund, retail super fund, governance and performance - independent directorsThe fight between industry and retail super funds appears to be moving to a new battleground, this time over the appointment of directors of super funds.

The McKell Institute, an “independent, not-for-profit public policy institute”, has released a report investigating the governance structures of retail and industry super funds, and comparing this to investment returns.

However the real purpose of this report seems to be to build an argument against an increase in the appointment of independent directors to industry super funds.

This comes as the as the federal government moves to increase the number of independent directors on superannuation fund boards, which was the topic of a discussion paper released by the treasury department shortly after the 2013 election.

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APRA super funds underperform investment benchmarks

APRA industry/retail super funds best return 2013/14 - Telstra Super, investment benchmarksAccording to data published by SuperRatings, APRA regulated super funds fell short of the relevant benchmarks for investing in Australian and international shares in 2013/14.

Recently published rankings of APRA-regulated Industry and Retail funds by SuperRatings shows that Telstra Super had the best performing ‘balanced investment option’ in the 2013/14 financial year, with 15.8%. Second place was held by Intrust Super at 14.0% and Unisuper and Australian Super tied for third at 13.9%. This compares to the median for a balanced option of 12.7% over the same period.

However, as noted by SuperRatings founder Jeff Bresnahan, the returns over a longer period are much lower, “over a 22 year period since the introduction of compulsory superannuation, Australian funds have returned 7.2% per annum”.

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