Ultimate super outcomes the key - APRA

The Australian Prudential Regulation Authority (APRA) has used its second submission to the Financial Systems Inquiry to warn against adopting a too simplistic analysis of costs and fees in the superannuation sector.

While acknowledging that the Inquiry's focus on the efficiency of the superannuation sector and its costs and fees is appropriate, the submission warned that any assessment of the efficiency of the sector had to be "framed in terms of the ultimate outcomes achieved for members".

"For any given pattern of contributions, members' outcomes are driven primarily by investment performance, but insurance and other benefit design aspects, fees, costs, taxes and the form and timing of benefits taken by members are also relevant considerations," the APRA submission said. "It is important to take into account all of these factors when making comparisons with other jurisdictions."

The regulator's submission also welcomed the inquiry's support for importance of regulator independence but referenced its earlier claim that while "APRA has substantial independence from Government in most respects …, over time, this has been eroded by constraints on its prudential, operational and financial flexibility.

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"APRA would therefore strongly support mechanisms that move it to a more autonomous budget and funding process, thereby enhancing APRA's operational independence and ability to conduct efficient forward planning for its operations," the submission said.

"A more autonomous funding process would need to be accompanied by increased accountability and transparency regarding how APRA utilises its resources."

"To effectively perform its role, APRA needs to be able to attract suitably skilled and experienced staff. This is more difficult if APRA is unable to maintain the relativities of its own employment conditions with those of the financial sector, from which APRA does the bulk of its recruitment. Any enhanced budgetary process should be designed with this in mind," the submission said.