APRA has recently released its policy and supervision priorities for 2023. For the superannuation space, APRA is maintaining its focus on holding trustees to account to improve member outcomes. This includes rectifying sub-standard industry practices, eradicating unacceptable product performance, and influencing improved retirement outcomes. In 2023, APRA will also seek to finalise some guidance on investment governance, MySuper asset transfer requirements, and general audit related matters.
In terms of rectifying sub-standard industry practices, APRA says it will, among other things, focus on the strength of internal control systems, including through targeted supervisory actions where sub-standard practices are identified. It expects all trustees to have undertaken self-assessments in the areas of strategic and business planning, fund expenditure, and valuation. One of the focus areas will be to assess the progress of trustees in those areas.
With the continual rise of inflationary pressures, higher interest rates, and global unrest, APRA will be taking a targeted approach to assess how trustees are preparing for the changing environment and the adequacy of their practices. This will be guided by the information it collects from its supervisory activities.
To ensure super products are performing at an acceptable standard, APRA will continue to use the annual performance test and hold trustees accountable for addressing poor performance through various Heatmaps. While the MySuper Heatmap has been a staple for the past few years, 2023 will also see the Choice Heatmap being available for the first time.
“We all know that the Government’s review into the Your Future, Your Super reforms is yet to conclude. But we encourage trustees not to delay examining the performance of all their products as well as the fees that are charged. Regardless of the outcomes from the review, performance and sustainability will remain a key focus of our supervisory work, so don’t sit back and wait.” – APRA Deputy Chair, Margret Cole
In collaboration with ASIC, to influence better retirement outcomes, in 2023 APRA will conduct thematic reviews of how trustees have implemented the retirement income covenant within their business strategies and operations. It aims to finalise its guidance on investment governance in mid-2023 following the conclusion of the consultation in March and finalise the guidance in the second half of the year. APRA also intends to release proposed revisions to its guidance on strategic planning and member outcomes for further consultation with the goal of delivering quality outcomes for members with consultations scheduled for the whole year.
The other big planned deliverable for APRA in 2023 is the new requirements for transfer planning. Last year, it commenced consultation on a series of measures to enhance planning by trustees in the event they need to transfer members out of, or into, their fund, including new requirements relating to the event of cancellation of an authority to offer a MySuper product. The new requirements are expected to be finalised in the first half of the year subject to the results of industry consultation.
