QSuper has questioned whether removing the 5% asset exemption rule provided for under current portfolio holidays disclosure legislation is in the best financial interests of superannuation members.
In its Senate Standing Committees on Economies submission on the Your Future, Your Super bill the super fund said it fundamentally believed in transparency and the need to provide an appropriate level of information to its members.
The proposed exemption provided for up to 5% of investment option assets not to be disclosed if the investment items were commercially sensitive and making the information publicly available would be detrimental to members’ interests.
This exemption would allow super funds to exercise discretion around assets which were under negotiation, such as unlisted assets.
QSuper said it strongly questioned:
“By requiring full disclosure of all assets, the bill widens the information asymmetry (already opened by portfolio holding disclosure rules) that allows other market participants advantages in transacting,” it said.
“Many funds have sought investment in private asset classes (real estate, infrastructure, private equity) as they can offer key diversifying benefits to members. The long-term, stable returns (often linked to CPI) with lower sensitivity to broad economic activity provide opportunities to generate strong investment returns for members.
“Publishing a specific value against these assets is unlikely to provide meaningful disclosure to members, but is likely to limit the ability of funds to competitively transact in those assets.”
The super fund said any distortion in pricing that this information asymmetry gave rise to was not in the best financial interests of members and could potentially impact members’ retirement incomes.
The submission recommended that:
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