Australia’s regulator wants the nation’s superannuation funds to deliver better and more comprehensible data on their performances and operations next year.
These pension programs will begin to publish publicly available “heat maps” of their results in early 2020. The Australian Prudential Regulation Authority sees a need to provide beneficiaries with better information to judge how the funds are doing, said Helen Rowell, the body’s deputy chair, in a Wednesday speech.
“This will include a set of performance metrics at an individual fund and product level (where reliable data is available) across four key quantitative areas: investment performance; fees and costs; insurance; and scale and sustainability,” she said during the conference. “Initially this will just be for MySuper products but will be broadened to include choice products as our data collection in this area expands and we have confidence in its reliability.”
A superannuation fund is a pension plan that covers a specific industry, such as construction or health care. MySuper is an investment vehicle some funds offer members. They offer various strategies participants may choose to allocate their retirement assets, similar to a 401(k) plan.
The objective is a response to last year’s public inquiry that exposed some problems within the financial industry.
“In addition to taking a more assertive supervisory stance, APRA will deliver greater transparency; on the industry’s operations, performance and delivery of outcomes, and also on the actions we are taking to lift behavior and practices across the industry and within individual trustees,” Rowell said.
It also seeks to raise standards for the Super sector while informing the public on its activities in a way it can understand. “The waters are further muddied by a tendency for vested interests to skew the data to paint their sector, fund, or product in the most flattering light,” Rowell said. She warned that any fund not measuring up could be closed.
“Our challenge is to collect and present superannuation data in a way that can be understood by a broad audience and yet also allows for meaningful comparisons between funds and products,” Rowell said.
Performance has not been so super, as the industry’s 198 funds have returned an average 5.8% in the past 10 years, which is why Rowell’s department wants to focus on “cleaning up the unsustainable and underperforming tail of the industry” in addition to upping the bar.
Australia’s superannuation funds manage about $1.2 trillion in assets.
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Tags: Australia, Australian Prudential Regulation Authority, Heat Maps, Helen Rowell, Pension, Superannuation Funds