The Australian Prudential Regulation Authority (APRA) has issued a discussion paper seeking information from superannuation trustees on their plans to maintain the financial resilience needed to protect members’ best financial interests.
APRA’s prudential standards require superannuation trustees to maintain sufficient financial strength to operate their businesses effectively, including in cases of unexpected expenses such as systems upgrades, corporate restructures or paying fines.
Through the discussion paper, APRA is seeking feedback on the use of the operational risk financial requirement (ORFR), reserving practices, and protections afforded to trustees via insurance, and how these might need to adapt over time.
The discussion paper outlines key principles for fee setting and design, informed by the law as it currently stands. As applications seeking judicial advice are still before the Courts, APRA notes that matters relating to the charging of trustee fees and management of financial resources are likely to continue to evolve over the coming months.
APRA Executive Board Member Margaret Cole said: “Australia’s superannuation system is served by a variety of business models that use a range of tools to bolster their financial position: from charging fees, to receiving an injection of capital or utilising fund reserves.
“What they all have in common is an obligation to make sure they have the resources, systems, processes and expertise to protect their members’ best financial interests at all times. This requires trustees to undertake sufficiently robust business and contingency planning to ensure they retain access to adequate financial resources, including when unexpected costs arise.
