The Australian Prudential Regulation Authority (APRA) has signalled it is more interested in getting rid of the superannuation industry’s performance cellar dwellers than focusing on the “best in show” concept flagged in the Productivity Commission’s final report.
APRA deputy chair, Helen Rowell, made the point clear to an Australian Institute of Superannuation Trustees (AIST) forum when she said that while much debate had centred around the PC’s “best in show” concept, “APRA’s focus, on the other hand, has been at the other end of the spectrum: weeding out the industry’s under-performing tail.”
Rowell said that it was within this under-performing tail that most damage to members’ interest was being done.
“The bulk of superannuation funds from all sectors perform well – as the Productivity Commission noted ‘the majority of members and assets in the system are in products that have performed reasonably well’,” she said.
“However, too many members are invested in funds that consistently deliver sub-par outcomes, potentially reducing members’ retirement incomes by hundreds of thousands of dollars over a working life.”
Rowell claimed that a lack of transparency and the complexity had been created by the sheer number of products and options on offer and this had hindered member engagement, and made it much harder to assess performance across the full spectrum of the industry.
“By collecting and publishing a wider range of more granular data, APRA will make it much clearer to all stakeholders which trustees need to lift their game, and where,” she said noting that APRA would be implementing its member outcomes policy from 1 January, 2020 including publishing heatmaps providing an assessment of all MySuper products.