APRA maintains pressure on super funds

21 January 2020

The Australian Prudential Regulation Authority (APRA) has revealed the degree of pressure it applied to underperforming superannuation funds ahead of the release of its first “heatmaps” last year and the reality that those funds remain under pressure.

The regulator has revealed the degree of pressure applied in its first-ever “Year in Review” publication covering 2019 and makes clear that it contacted underperforming funds ahead of the release of the heatmaps to ask those funds what they going to do about the situation.

It confirmed that in the absence of those superannuation funds acting to turn their performance around, they would need to consider mergers or actually exiting the industry.

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“Ahead of its [the heatmaps] release, APRA contacted the trustees of the worst performing products and asked them to provide or update action plans outlining how they intended to address identified weaknesses,” the Year in Review document said.

“If these trustees are unable to make substantial improvements in good time, APRA will consider other options, including the need for the trustees to consider a merger or to exit the industry.” It said.

“However, APRA expects all trustees, regardless of how their funds appear on the heatmap, to reflect on the drivers of their current performance, and to identify where they can do better.”

A number of superannuation fund trustees have questioned the methodology utilised by APRA in the heatmaps and the accuracy of the underlying data.

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A race to index returns.

Good observation, but the portfolio construction of the best performing funds do not show a lot of investment in index funds.

Hedware, if you refer to the best performers being Industry Funds such as HOST PLUS Balanced, have you ever really looked at the portfolio?

Have a look at qsuper, it's equities mandate is factor or index, cheap but being sold at a higher fee. Vanguard new super product will knock them all down , then we'll see if they really wanted the war

and if the only measure of a good super fund is performance I'm pretty confident the quality of service from these super funds will be somewhere between Centrelink and the ATO. "Press 1 to talk to our outsourcing team in Croatia and we'll process that death benefit payment in 2 years.....To talk to a Human being press 2 to get our mailing address. "

Are you using your Centrelink and ATO examples as being illustrative of the performance of poorly performing super funds? I have to suggest that I would like ATO performing less well than it does at present.

I think performance by and of super funds can be assumed to have a wider ambit than their telephone service.

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