APRA urges trustees to reserve
The Australian Prudential Regulation Authority (APRA) has urged superannuation fund trustees to consider ensuring that their funds are appropriately reserved to handle any contingency.
APRA executive general manager, supervisory support division, Keith Chapman told a meeting of Government superannuation funds that not only was it a good idea for funds to establish a reserve but that the size and purpose of the reserve should be reviewed at least once a year.
Chapman acknowledged some of the arguments about the inherent equity in establishing a reserve when those members who contributed to it might not be the ultimate beneficiaries, but his presentation argued that it might be more equitable to penalise those who are in the fund when a loss event occurs, even if the reserve has been built up over many years.
“There is nothing inherently wrong in spreading costs over time or different generations of members,” Chapman’s presentation said. “Think of reserving as an internal smoothing arrangement — merely because there has been no claim, insurance does not become unwarranted.”
AUTHOR
Mike Taylor
Recommended for you
The top five licensees are demonstrating a “strong recovery” from losses in the first half of the year, and the gap is narrowing between their respective adviser numbers.
With many advisers preparing to retire or sell up, business advisory firm Business Health believes advisers need to take a proactive approach to informing their clients of succession plans.
Retirement commentators have flagged that almost a third of Australians over 50 are unprepared for the longevity of retirement and are falling behind APAC peers in their preparations and advice engagement.
As private markets continue to garner investor interest, Netwealth’s series of private market reports have revealed how much advisers and wealth managers are allocating, as well as a growing attraction to evergreen funds.
