The Australian Prudential Regulation Authority (APRA) today announced plans to undertake a "health check" of Defined Benefit superannuation funds.

APRA is concerned that the current weak equity markets may have caused deterioration in the financial position of some funds in this industry sector.

Defined Benefit funds promise a specific benefit to their members, usually in the form of a multiple of salary. It is essential for trustees to retain sufficient assets and liquidity in these funds to cover emerging liabilities.

"In the current financial environment, we expect trustees to be regularly reviewing the financial health of funds under their management," said Ramani (S.G) Venkatramani, General Manager of APRA. "But we need to be sure that they are taking the necessary prompt action to address any significant deterioration in their funds financial position."

APRA will be approaching select fund trustees for an up-to-date calculation of a number of financial indices. If it appears that the financial condition of the fund has deteriorated, the trustees will be asked to advise APRA of the plans that will be put in place to restore financial security for fund members.

"APRAs focus is on our beneficiaries, who are the members of the superannuation funds. In times of volatile investment markets, we must take steps to ensure their best interests are being protected," Mr Venkatramani said.

APRA is confident that the majority of Defined Benefit funds are well managed and financially secure. It will work on specifically identified issues together with the trustees and actuaries of a small minority of funds where needed to ensure they remain financially sound.

Click here for APRA Guidance Notes for Actuaries, Auditors and Trustees on Defined Benefits Superannuation Funds Solvency

APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It currently regulates $1.5 trillion in assets for 20 million Australians.