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A recently published analysis has revealed the degree to which Australian superannuation funds were impacted by the global financial crisis and needed liquidity relief.
The Australian Prudential Regulation Authority (APRA) has revealed that in the period from 29 September, 2008, it granted portability relief to 24 trustees for 51 superannuation funds due to underlying investments becoming illiquid.
And the APRA analysis suggests that it was funds holding direct investments that were most affected, saying “the vast majority of the portability relief granted related to investment options that were 100 per cent invested in a single underlying asset.”
According to other industry research, industry superannuation funds have held higher exposures to direct investments than retail master trusts.
The APRA analysis said that if such an asset became illiquid it could trigger the “significant adverse affect test” within the Superannuation Industry (Supervision) Act regulations.
The APRA analysis also noted that it had become apparent from applications for extension of portability relief over recent month that the amount of monies invested in frozen/suspended underlying managed investment schemes was not materially reducing.
