The extended period of the COVID-19 pandemic may hasten the exit of some superannuation funds, according to the Australian Prudential Regulation Authority (APRA).
In an analysis within its latest corporate plan, APRA pointed to the challenges facing superannuation funds as a result of the COVID-19 pandemic and the associated hardship early release superannuation arrangements and noted that the longer the situation continued the greater challenges would be.
It then said that the “pandemic and associated impacts will also continue to accelerate viability and sustainability issues facing some superannuation funds, particularly those who were already showing indications of challenges in continuing to be able to sustainably deliver quality outcomes for members”.
Elsewhere in its analysis, APRA also noted that beyond the pressures being exerted by the early release scheme, “rising unemployment will continue to impact the cashflow of superannuation funds as contributions are likely to slow and outflows are expected to remain elevated”.
“Service continuity within both funds and service providers such as administrators has generally been maintained despite increased member activity, including high call volumes and the need to manage early release applications expeditiously. However, sustaining service levels through an extended period of substantially remote working will require careful management,” the analysis said.