The covenant, which came into effect on 1 July 2022, requires trustees to develop a retirement income strategy to improve long-term outcomes for their members in or approaching retirement.

APRA and ASIC examined the progress made by 15 trustees, responsible for 16 industry, retail, corporate and public sector superannuation funds in implementing the covenant over the past year. The review considered how trustees understood member needs, how they offered assistance to members and how they executed and oversaw their strategy.

The funds reviewed collectively represent approximately half the total accounts and superannuation balance held by members aged 45 and above across APRA-regulated funds – over 5 million accounts with $862 billion in superannuation balance as at December 2022.

Overall, the review found that while trustees are improving their offerings of assistance to members in retirement, there is variability in the quality of approach taken and a lack of urgency in embracing the intent of the covenant.

Key findings from the review show the need for more focus on:

• Understanding member needs. While trustees draw data from a range of internal and external sources to understand their members’ retirement needs, all have gaps in the critical information they need about their members to inform the development of an effective retirement income strategy. Very few had plans to address these gaps.
• Designing fit-for-purpose assistance. Trustees have taken positive steps to improve assistance through a range of measures. However, some trustees are not using metrics to track how their members are using the assistance measures and their effectiveness to determine whether any changes are needed.
• Overseeing strategy implementation. Many trustees have not embedded their retirement income initiatives as concrete actions in their overall business plan. Additionally, a majority of trustees lack quantitative metrics to assess the retirement outcomes resulting from their initiatives.

APRA Deputy Chair Margaret Cole said: “A further three million members will become eligible to draw from their super in the next 10 years^[1]. They are entitled to rely upon their super fund for assistance as they plan for a sound financial future.

“Some trustees have made a good start, but overall there has been a lack of progress and insufficient urgency. As more members approach retirement, trustees must step up and deliver both well-considered strategies and action to support members in retirement.”

Ms Cole added that, where appropriate, APRA’s prudential framework would be enhanced to reflect key findings of the review. APRA will consult on proposed enhancements later in 2023.

ASIC Commissioner Danielle Press said: “Australians contribute to their superannuation for many years in anticipation of financial well-being in retirement. Helping fund members achieve good retirement outcomes is the core business for a super trustee and the retirement income covenant offers a lot of flexibility for trustees to effectively support their members’ needs.

“Trustees must get the fundamentals right – their retirement income strategies must be designed with consumer needs in mind and be evidence-based. They need to be mindful that their members’ needs evolve over time and commit to continuously monitoring and improving their approach,” Ms Press said.

A copy of the information report is available on the ASIC website. APRA and ASIC recommend that all superannuation trustees review the report and examples of better practice, and take steps to strengthen their retirement income strategies.

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $8.6 trillion in assets for Australian depositors, policyholders and superannuation fund members.

The Australian Securities and Investments Commission (ASIC) is Australia’s integrated corporate, markets, financial services and consumer credit regulator. We license and monitor financial services businesses to ensure that they operate efficiently, honestly and fairly. These businesses typically deal in superannuation, managed funds, shares and company securities, derivatives and insurance.

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[1] National, state and territory population, December 2022 | Australian Bureau of Statistics (abs.gov.au) (Population by age and sex – national, Table 8)

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Mrs Rowell is currently the Executive General Manager of APRA’s Supervisory Support Division. Mrs Rowell joined APRA in 2002 and has been employed in a number of senior roles including General Manager, Diversified Institutions Division and General Manager Policy Development.

Mrs Rowell has represented APRA at various subcommittees of the International Association of Insurance Supervisors. She also represents APRA on the FSB’s Supervisory Intensity and Effectiveness Group and co-Chairs the Joint Forum Financial Conglomerates Committee.

APRA Chairman John Laker welcomed Mrs Rowell’s appointment: ‘Helen brings a wealth of experience and knowledge to the position of APRA Member from her 10 years in senior roles within APRA and also from her extensive experience in the private sector.’

Prior to joining APRA, Mrs Rowell was a partner at the international consulting firm Towers Perrin (now Towers Watson), and she is also a Fellow and past President of the Institute of Actuaries of Australia.

The announcement can be found on the Treasurer’s website.

Today’s announcement follows changes, announced in April this year, to APRA’s Executive Group. It was announced APRA’s Deputy Chairman Ross Jones would not be seeking re-appointment and would leave APRA on 30 June 2013 after serving two five-year terms, and that APRA Member Ian Laughlin would be appointed Deputy Chairman for two years from 1 July 2013.

It was also announced at that time that Wayne Byres, former APRA Executive General Manager and currently Secretary General to the Basel Committee on Banking Supervision, will commence as APRA Chairman on 30 June 2014 with John Laker continuing to serve as APRA Chairman until that time.

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This year APRA has consulted extensively with industry and other stakeholders during the development of its prudential standards for superannuation and the MySuper authorisation process. The material released today responds to a number of guidance-related matters that were raised in submissions during this consultation.

The 10 draft PPGs include practical guidance on matters that a registrable superannuation entity licensee (RSE licensee) may consider to assist it in meeting the requirements in APRA’s prudential standards. APRA has drafted the superannuation PPGs to align where appropriate with guidance in other APRA-regulated industries.

APRA Deputy Chairman Ross Jones said that the draft PPGs will assist in the implementation of APRA’s prudential standards and help strengthen the superannuation system.

‘This guidance will not only provide practical support to RSE licensees in meeting the requirements of the prudential standards, but will also encourage the further development of good practice,’ Mr Jones said.

The 10 draft PPGs released today focus on areas APRA considers to be most important for MySuper authorisation and also include draft PPGs that relate to core elements of the prudential framework.

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Total estimated assets, which include the assets of self-managed superannuation funds and the balance of life office statutory funds, rose by $168.4 billion (13.0 per cent) to $1.46 trillion over the 12 months to 30 September 2012, taking into account an increase of $71.8 billion (5.2 per cent) in total assets over the September quarter.

Over the September quarter, the total estimated assets of retail funds increased by 6.6 per cent ($23.8 billion) to $386.6 billion, industry funds by 5.6 per cent ($14.9 billion) to $281.1 billion, public sector funds by 4.3 per cent ($9.6 billion) to $232.3 billion and corporate funds by 4.1 per cent ($2.3 billion) to $58.1 billion.

Contributions to funds with at least $50 million in assets over the September quarter were $19.6 billion, with employers contributing $15.8 billion and members contributing $3.6 billion. Other contributions, including spouse contributions and government co-contributions, totalled $121 million.

During the September quarter, public sector funds received 32.8 per cent ($6.4 billion) of total contributions, industry funds 31.8 per cent ($6.2 billion), retail funds 31.1 per cent ($6.1 billion) and corporate funds 4.4 per cent($0.9 billion).

Outward rollovers exceeded inward rollovers in the September quarter. Industry funds received $1.7 billion of net rollovers. Corporate, retail and public sector funds had negative net rollovers of $447 million, $716 million and $2.6 billion, respectively.

The annual industry-wide rate of return (ROR) for quarterly reporting funds for the year ending 30 September 2012 was 9.9 per cent and the quarterly industry-wide ROR for the September 2012 quarter was 4.1 per cent. The quarterly RORs for each fund type as a whole for the September 2012 quarter were 4.4 per cent for corporate funds, 4.2 per cent for public sector funds, 4.1 per cent for industry funds and 4.1 per cent for retail funds.

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The guidance is intended to assist registerable superannuation entity (RSE) licensees to meet their obligations under Prudential Standard SPS 410 MySuper Transition which was released as a final draft on 3 October 2012. SPS 410 sets out requirements for the movement of accrued default amounts into a suitable MySuper product before 1 July 2017.

Consultation on the draft guide closes on 5 November 2012 and the final guide is expected to be finalised by December 2012. The draft guide is available on the APRA website – click here.

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APRA’s proposed reporting requirements implement the transparency and accountability recommendations from the Government’s Stronger Super reforms, and the proposals APRA previously consulted on in 2009. The proposed new requirements also support the implementation of prudential standards, MySuper products and SuperStream. These proposed revisions will be the first changes to the reporting requirements for superannuation since 2004.

The main proposed changes to reporting requirements include: information about each trustee, fund, sub-fund, MySuper product and select choice investment options. This replaces the focus at fund level in the current data collection and responds to previous industry commentary on the limitations of APRA’s fund-level superannuation reporting; information about investment returns for each MySuper product and select choice investment options.

This will allow greater comparability across the industry, particularly between MySuper products; and the collection of expanded information about investments, including looking through investment structures to identify and understand ultimate investment asset allocation and costs.

APRA Deputy Chairman Ross Jones said APRA is proposing material changes to the superannuation data collection. ‘Overall, APRA expects that this new data collection will be of significant benefit to all industry stakeholders by providing greater transparency of investments and costs.’

‘As with the introduction of prudential standards for superannuation, these proposals are raising the bar to bring the superannuation data collection to a level that is consistent with the other industries APRA regulates,’ he said.

This consultation package outlines a substantially larger data collection than is currently in place for the superannuation industry. APRA acknowledges the extensive scope of the proposals and encourages industry to provide feedback as to how the proposed data collection would best support objectives of transparency and comparability across the industry, as well as APRA’s prudential supervision.

Consultation on the draft reporting requirements closes on 16 November 2012 and the final superannuation reporting standards are expected to be determined and released in the first half of 2013. The requirements in the final reporting standards are expected to take effect from 1 July 2013 with the first publication using the new data in late 2013.

The discussion paper and the 31 draft reporting forms and instructions can be found on the APRA website.

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Total estimated assets, which includes the assets of self-managed superannuation funds and the balance of life office statutory funds, rose by $49.6 billion (3.7 per cent) to $1.40 trillion over the 12 months to 30 June 2012, taking into account an increase of $3.8 billion (0.3 per cent) in total assets over the June quarter.

Over the June quarter, the total estimated assets of public sector funds’ assets increased by 1.9 per cent ($4.1 billion) to $222.2 billion, industry funds increased by 0.6 per cent ($1.5 billion) to $266.0 billion, retail funds’ assets decreased by 1.3 per cent ($4.7 billion) to $372.1 billion and corporate funds’ assets decreased by 2.0 per cent ($1.1 billion) to $55.8 billion.

Contributions to funds with at least $50 million in assets over the June quarter were $29.9 billion, with employers contributing $24.2 billion and members contributing $5.6 billion. Other contributions, including spouse contributions and government co-contributions, totalled $141 million.

During the June quarter, public sector funds received 38.2 per cent ($11.4 billion) of total contributions, retail funds 30.9 per cent ($9.2 billion), industry funds 27.5 per cent ($8.2 billion) and corporate funds 3.4 per cent ($1.0 billion).

Outward rollovers exceeded inward rollovers in the June quarter. Industry funds received $151 million of net rollovers. Corporate, public sector and retail funds had negative net rollovers of $477 million, $728 million and $762 million, respectively.

The annual industry-wide Rate of Return (ROR) for quarterly reporting funds for the year ending 30 June 2012 was 0.4 per cent. The quarterly industry-wide ROR for the June 2012 quarter was -1.4 per cent. The quarterly RORs for each fund type as a whole for the June 2012 quarter were -0.9 per cent for public sector funds, -1.2 per cent for industry funds, -1.5 per cent for corporate funds and -1.8 per cent for retail funds.

A copy of the publication is available on APRA’s website  – click here.

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In October 2011, the Government amended the Banking Act 1959 to allow ADIs to issue covered bonds. Since then, APRA has been consulting on a prudential standard to apply to ADIs that issue covered bonds. These consultations included a consultation package, released in November 2011, consisting of a discussion paper and a draft prudential standard.

APRA has held discussions with a range of industry participants and received nine written submissions in response to the consultation package. The response paper released today sets out APRA’s response to issues raised during these consultations.

The response paper also addresses comments received in relation to APRA’s proposal to amend Prudential Standard APS 120 Securitisation, in relation to the capital treatment of holdings of subordinate tranches of securitisations held by an ADI other than the originator of the securitised loans. This proposal is unrelated to covered bonds, but was included in the consultation package for convenience.

13 July 2012

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It also contains a range of data items for each individual entity, including profit and loss, balance sheet and solvency information.

To read the Bulletin, click here.

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Total estimated assets, which include the assets of self-managed superannuation funds and the balance of life office statutory funds, rose by $47.4 billion (3.6 per cent) to $1.38 trillion over the 12 months to 31 March 2012, taking into account an increase of $73.2 billion (5.6 per cent) in total assets over the March quarter.

Over the March quarter, the total estimated assets of industry funds increased by 7.3 per cent ($17.9 billion) to $264.5 billion, corporate funds’ assets by 6.4 per cent ($3.4 billion) to $57.0 billion, public sector funds’ assets by 6.3 per cent ($12.9 billion) to $218.1 billion and retail funds’ assets by 5.2 per cent ($18.8 billion) to $376.9 billion.

Contributions to funds with at least $50 million in assets over the March quarter were $20.1 billion, with employers contributing $16.9 billion and members contributing $3.1 billion. Other contributions, including spouse contributions and government co-contributions, totalled $137 million.
During the March quarter, industry funds received 32.6 per cent ($6.6 billion) of total contributions, public sector funds 32.1 per cent ($6.5 billion), retail funds 31.1 per cent ($6.3 billion) and corporate funds 4.3 per cent ($872 million).

Outward rollovers exceeded inward rollovers in the March quarter, with negative net rollovers of $17 million, $342 million, $698 million and $839 million for industry, corporate, public sector and retail funds, respectively.

The combined rate of return for the March quarter was 5.4 per cent. The rate of return for corporate funds was 5.5 per cent, industry funds 5.4 per cent, retail funds 5.3 per cent and public sector funds 5.3 per cent.

To read the full report, click here.

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