Strengthen superannuation standards, says Actuaries Institute
Governance standards for Australian superannuation funds are not strong enough and should be brought in line with existing standards for banks and insurers, according to Actuaries Institute chief executive Melinda Howes.
Howes believes the growth of the industry calls for the superannuation regulatory scheme to move closer to governance regarding other financial institutions like banks and insurers.
According to Australian Prudential Regulation Authority (APRA) figures from February 2012, the largest four funds each manage assets of more than $40 billion, and the largest 10 manage a combined amount of $348 billion.
In response to the current debate surrounding superannuaiton fund governance, Howes said that current standards do not reflect the growth of super funds and believes the current scheme and proposals are not enough.
"Given the size and significance of the sector, APRA should be provided with the power to impose the highest standards of transparency and governance to our public offer super funds," Howes said.
Howes' demands reflect concerns the institute raised in December 2011 in response to a discussion paper from APRA on prudential standards for superannuation.
The Actuaries Institute requested new standards that force public offer funds to have a critical mass of independent trustees.
"We support the representational model of selecting superannuation trustees where there is a strong common interest between the trustees and the members - for example, a corporate-sponsored super fund," said Howes.
"However we believe this model is less relevant in the case of large public offer funds where trustees are remunerated and have no direct link or close affinity to the members."
The Actuaries Institute's submission also called for heightened disclosure requirements and financial condition reporting to ensure transparency and increased responsibility to members.
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