The Australian Prudential Regulation Authority (APRA) has finalised its Strengthening superannuation member outcomes package of prudential standards for RSE licensees. The final package includes:
• new Prudential Standard SPS 515 Strategic Planning and Member Outcomes;
• amendments to Prudential Standard SPS 220 Risk Management;
• new Prudential Practice Guide SPG 515 Strategic and Business Planning; and
• new Prudential Practice Guide SPG 516 Outcomes Assessment.
APRA’s work on member outcomes is aimed at ensuring that RSE licensees rigorously assess their performance in terms of the outcomes they are providing their members and continually strive to improve those outcomes. The standards focus on a principles-based, outcomes-oriented approach designed to ensure that RSE licensees are equipped to respond to strategic challenges, and soundly and prudently manage their business operations while improving their superannuation products and options, performance and outcomes for all members.
APRA’s requirements are consistent with the outcomes assessment proposed in the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No.1) Bill 2017 (the Bill) currently before Parliament. APRA will review whether any changes are needed to the prudential standards and guidance to maintain consistency with the Bill, if and when it is passed.
The new prudential requirements will take effect from 1 January 2020.
RSE licensees will be expected to meet strengthened requirements for strategic and business planning requirements, including management and oversight of fund expenditure. A core component of the new requirements is the introduction of an annual outcomes assessment to be undertaken as part of an RSE licensee’s business planning cycle. The assessment requires RSE licensees to annually benchmark and evaluate their performance in delivering quality outcomes to all members – covering members of both MySuper and choice products.
SPS 515 forces trustees to have strategic objectives to support member outcomes, have a bboard-approved business plan, ensure that decisions to incur expenditure support strategic objectives and conduct outcome tests annually.
SPS 515 does not just apply to MySuper products. It will apply to all legacy products. That is significant because it means the trustees of poor performing super fund products will have to act.
Prudential Practice Guide SPG 516 explains to trustees their obligations in clear language.
