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