APRA to put the ‘heat’ on under-performing pension funds

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The Australian Prudential Regulation Authority (APRA) will begin publishing ‘heat maps’ of the performance of pension funds next year and will pressure those with poor records to leave the industry, according to the regulator’s deputy chair, Helen Rowell.

In a speech delivered to the Australian Institute of Superannuation Trustees’ (AIST) conference of major superannuation funds, Ms Rowell said that Australian pension funds manage $1.7 trillion in savings but lack maturity in governance and risk management practices.

The superannuation industry is under increasing pressure to lift standards and improve accountability after the findings of the banking royal commission were handed down earlier this year.

“APRA will deliver greater transparency on the industry’s operations, performance and delivery of outcomes, and also on the actions we are taking to lift behaviour and practices across the industry,” Ms Rowell said.

“We expect to begin making public our view of fund performance at a more granular level – our heat maps, if you like.”

The heat maps would include performance data for individual retirement funds encompassing performance, fees, costs, insurance and sustainability.

APRA would draw insights from the data to identify underperforming funds and products, and the companies linked to those products would then be targeted by the regulator with intensified supervision.

“If trustees are unable or unwilling to respond appropriately, we will be urging them to seriously consider whether restructuring or exiting the industry is in their members’ best interests,” Ms Rowell said.

She also took aim at politicians who are dragging their feet on legislation to boost APRA’s powers in the wake of the royal commission.

“Our ability to compel action is more limited than we would like,” she said. “But we will be using whatever tools and powers we have to get action.”

Would you like to see APRA given more powers to police the performance of pension funds?

Read Helen Rowell’s full speech to the superannuation conference.

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Written by Ben

8 Comments

Total Comments: 8
  1. 0
    0

    What a great idea.

  2. 0
    0

    The Retail Funds results will shock you.

  3. 0
    0

    And what happens to those members who have grandfathered benefits that will disappear if they change funds? Or is this another sneaky way to get out of delivering on political promises?

  4. 0
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    And what happens to those members who have grandfathered benefits that will disappear if they change funds? Or is this another sneaky way to get out of delivering on political promises?

  5. 0
    0

    Underperforming? How about high salaries to CEOs and directors? Better still force the industry to have reasonable salaries as well as penalties for woeful performance.

    • 0
      0

      Agreed Mick re the salaries, maybe consider a performance based bonus but limited to no more than any annual(?) wage increase for their company employees.

      As regards “penalties”, what parameters would determine the degree of “woeful performance” ? The annual balance sheet/Company Report? Which begs the question – who’s responsible ?

  6. 0
    0

    APRA should be given all necessary powers to go after bad performers and crooks. However, they can’t attack greed – the Govt has to ensure CEOs etc cannot be paid exorbitant remuneration packages especially huge Bonuses. Their maximum salaries should be say $1Mil with a maximum of 20% Bonus based on KPIs with at least 50% weightage for Customer satisfaction measured by an independent agency such as ABS. APRA / ASIC could then police that (the salary packages and actuals paid) – greed being the root of all evil in the financial sector.

    That said, there needs to be another body / committee which overseas APRA to ensure they actually use their powers, if not heads need to roll there. We haven’t seen any such consequences so far for APRA and ASIC non-performers after the Banking RC.

  7. 0
    0

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