The prudential regulator has imposed additional licence conditions on Christian Super where it will be required to implement a strategy to merge with a larger, better performing fund.
An announcement by the Australian Prudential Regulation Authority (APRA) said the licence conditions was to “protect the best financial interests of the fund’s members”.
The decision followed an investigation into the oversight, governance, and strategic decision-making and aimed to rectify the fund’s “persistent investment underperformance” which saw the fund fail the MySuper performance test.
The licence conditions included a requirement to implement a strategy to merge with a larger, better-performing fund by 31 July, 2022, and report to APRA if the merger was not executed by that date.
Christian Super was also required to engage an independent expert to ensure its merger decision took into account the best financial interests of members, consistent with its duties under superannuation law.
APRA member Margaret Cole said: “Christian Super has a legal obligation to protect the best financial interests of its members. In light of its ongoing underperformance, APRA’s assessment is that the optimum way for Christian Super to do this is to move its members to a better performing and more sustainable product as soon as possible.
“These new licence conditions are designed to set out a clear path for Christian Super to achieve this, while also ensuring the trustee obtains independent advice and reports to APRA on its progress before making a go-ahead decision for these members.”
Commenting, Christian Super said the fund sought a collaboration partner who could deliver holistic improved financial outcomes for members and shared its vision and approach to values-based responsible investing, retaining what had contributed to the fund’s leadership in ethical and impact investing, coupled with continued strong growth and innovation.
Christian Super chief executive, Ross Piper, said: “Upholding your values in super will be a key goal as we evaluate which potential partner will provide the best financial outcome for you.
“We’ve been exploring collaboration opportunities with peer funds for some time, because a bigger fund, with more members and pooled savings, could potentially deliver important scale benefits to our members and their retirement.
“As we continue this process, our members’ values will remain a key consideration for us, recognising that fees and returns are important but are not the only reason Australians choose their superannuation fund.
“It is my sincere hope that the super system of tomorrow retains the variety of choice we have today for Australians who want to invest in line with their values. This is what we’ll be working towards on behalf of our members.”
This is the second superannuation fund that APRA has imposed licence conditions that require the fund to merge. Last month, APRA placed three licence conditions on EISS Super following investigations on its failed performance test and expenditure matters.