ASIC welcomes standard risk measure for super funds
ASIC today welcomed the launch of the Standard Risk Measure for superannuation by the Association of Superannuation Funds (ASFA) and the Financial Services Council (FSC).
The Standard Risk Measure disclosures the level of risk in superannuation and provides consumers with greater transparency about the risks associated with their investment choices in superannuation.
It is the product of an ASFA and FSC working group, and is supported by ASIC and the Australian Prudential Regulation Authority (APRA).
ASIC Chairman Greg Medcraft said: ‘The Standard Risk Measure is a useful tool for both consumers and industry. It will help people to understand the risks in superannuation and make confident and informed decisions. It will also provide the industry with a Standard Risk Measure to use when calculating risk and help these important gatekeepers make disclosures to members.’
APRA will require superannuation funds to identify and disclose the risk of negative returns over a 20-year period for each of their investment options on a standardised basis. This was first outlined in APRA’s letter of 29 June 2010.
The Standard Risk Measure will have seven risk bands, ranging from ‘very low’ to ‘very high’, and sets out what these terms will mean in regards to the chances of a negative return in a twenty year time period. Super fund members can more easily compare investment options within their fund, as well as make comparisons across superannuation funds.
It is expected that the risk measure will be included in super fund Product Disclosure Statements (PDS). The start date for disclosing this information on a standardised basis will be 22 June 2012, to align with the timeframes by which all trustees must be using a shorter Product Disclosure Statement (PDS).
