Super disclosure regime to harm retirement outcomes

The Government’s proposed disclosure requirements for superannuation funds will negatively impact retirement income, according to the Australian Institute of Superannuation Trustees (AIST).

The disclosure regime, set to come into effect on 31 December, would require super funds to disclose the precise value of privately held assets.

AIST chief executive, Eva Scheerlinck, said while the association supported disclosure on a wide-ranging basis, it needed to be done in a way that did not prejudice members’ best financial interests.

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“Requiring super funds to disclose the precise value of privately held assets will compromise their ability to effectively implement investment strategies on behalf of members – members’ retirement outcomes will be harmed,” she said.

“Signalling the precise value of unlisted assets will enable other institutional investors, including overseas buyers including sovereign wealth funds and hedge funds to receive an unfair advantage over Australian super funds. This may risk co-investment opportunities and ultimately may jeopardise Australian jobs and returns to Australian super fund members.

“Unbelievably, the Government would be giving overseas investors a leg up at the expense of Australian fund members.”

AIST said if implemented in its current form, the regime would:

  • Give an advantage to foreign buyers (who were not required to disclose specific values) over Australian super funds – this may increase foreign ownership of these assets over time and jeopardise Australian jobs;
  • Make Australian super capital less attractive to investment partners and reduces access to investment opportunities;
  • Prevent Australian super funds from maximising the sale price when they were selling an unlisted asset as buyers would have information on the vendor’s current carrying value;
  • Give foreign buyers an advantage when they were bidding for other assets in the same market as those held by Australian super funds as they would have a clear signal of value;
  • Have a negative impact on the carrying value of assets held by Australian State and Federal Governments where interests were held alongside Australian super funds;
  • May lead to opportunistic sale approaches with public/shareholder pressure to sell the asset at the disclosed value; and
  • Under the proposed derivates disclosure, a hedge fund would be able to use disclosed information against an Australian super fund, adversely effecting pricing and returns.

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They really don't like this do they.

Wow imagine having to actually tell investors what their assets are worth.
How they have not had to do this previously is the astonishing point.
From a SMSF to any other Super Funds they all have to value assets.
But not our mates at Industry Super, why should they value assets ?
How can ISA make fund returns sing when they are actually accountable for all these unlisted Asset prices ????

It's a very flawed argument and removed from market realities in terms of what buyers and sellers are already benchmarking against. The entire portfolio disclosure regime is a farcical as any member looking at it is looking at the wrong thing to start with. Other than ESG (over)activists how does it help any member or an adviser who should only be looking at the asset allocation (risk/return profile)

How does an unlisted asset have a "precise value" beyond what the best bidder is willing to pay for it? Does it come down to a discretionary valuation methodology or is the valuation methodology prescribed? I don't really understand how that is supposed to operate in any workable sense.

I guess Telstra, WOW, CBA and BHP will stop showing their share prices on the ASX after this revelation. Telling people what the company is valued at would be unfair....

Let’s be honest they don’t want to disclosure their extreme valuation for certain unlisted assets as it’s been a core reason behind their outperformance for the past 20 years

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