The Australian Prudential Regulation Authority (APRA) has released a paper addressing the challenges faced by superannuation trustees in enhancing operational efficiency, achieving growth, and solidifying their competitive position. Titled “Delivering member outcomes into the future,” the report highlights several key dynamics influencing the ongoing evolution of Australia’s superannuation system.
Among the critical points outlined in the paper are the continuing consolidation within the industry, which has resulted in a reduction in the number of superannuation funds. Additionally, the size of the superannuation system is growing, with a significant proportion of recent growth concentrated in the largest funds. While expense ratios are generally trending downwards at an aggregate level, the paper notes there are substantial differences across various funds. It also highlights significant discrepancies in cash flows and rollover dynamics.
The findings underscore the necessity for trustees to proactively consider these challenges as they formulate their strategic and business plans. APRA Deputy Chair Margaret Cole reiterated the importance of prioritising strong returns for members while also addressing business and risk objectives. These include enhancing support for members nearing retirement and maintaining operational risk and cyber resilience.
“Some super trustees face multiple challenges, not just in relation to matters that affect all super trustees, but specific to their own circumstances. They must have credible strategic plans to face and address the challenges in the best interests of members. Consistent with APRA’s approach over many years, such trustees can expect ongoing engagement from APRA to ensure credible strategic plans are in place and that long-term outcomes for member are firmly front of mind,” she stated.
The report serves as a clarion call for superannuation trustees to remain vigilant and adaptable in an evolving landscape, ensuring that the interests of their members remain a top priority.
