The Australian Prudential Regulation Authority (APRA) has denied knowledge of any superannuation funds who wanted to merge but could not find a willing partner.
Answering questions on notice from Senate Estimates, the regulator said if it did come across such an instance it would be inclined to use its powers to enable the fund to make an orderly exit from the industry.
Answering questions on notice from Tasmanian Green Senator, Peter Whish-Wilson APRA said it would continue to have discussions with consistently underperforming funds that faced sustainability issues to ensure that they continued to act in their members’ best interests and were clear on the appropriate strategy moving forward, “noting the requirements of Superannuation Prudential Standard 515 ‘Strategic Planning and Member outcomes’ (SPS 515) in force from January 2020”.
In doing so, APRA referenced the use of its heat maps regime to identify and deal with underperforming funds.
“The underlying premise of SPS 515 and APRA’s heatmap publication is to identify underperformance across a range of metrics, so as to prompt trustees to take necessary and appropriate action to improve member outcomes,” it said.
“This action could include reducing fees to improve member returns, or more extreme action such as an exit or merger.
“APRA will continue to enhance its data collection and to ensure transparency of fund performance, and to use the full suite of its regulatory powers to ensure trustees are meeting their obligations under the prudential framework.”
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
While some superannuation funds have gone down the route of internalisation, others say they favour ‘smart partnering’ with external managers for diversification appeal.
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