The Australian Prudential Regulation Authority (APRA) has been warned that a proposed new prudential standard dealing with remuneration risks placing superannuation funds at a disadvantage when it comes to recruiting investment management professionals.
The Association of Superannuation Funds of Australia (ASFA) has used a submission to APRA to recommend a separate, stand-alone prudential standard for superannuation funds and a clear statement from the regulator that superannuation funds will not actually be required to have variable remuneration under the new prudential standard CPS 511.
The superannuation funds organisation said that it was concerned that the approach being undertaken by APRA would place super funds at a recruitment disadvantage.
“Overall, ASFA is concerned about the ability of RSE licensees to compete for talent with other financial services industry participants (for example, private equity funds), as well as participants in other industries,” the submission said.
“There are many other industries that are not regulated by APRA and therefore would not need to follow CPS 511, particularly with regard to the composition of their variable remuneration,” it said.
“For example, an investment management professional might have a choice between doing essentially the same job at a superannuation fund, where their variable remuneration will be partly deferred under CPS 511, or at a fund manager where their variable remuneration will be paid in full upon vesting.”
The APRA submission said that not all superannuation funds had variable remuneration and that the choice of offering was made on the basis of individual circumstances.
“APRA should be clear absolutely clear that variable remuneration is not a requirement,” it said.