The Australian Prudential Regulation Authority (APRA) has released the results of its recent research on the governance practices of APRA-regulated superannuation funds. This research, part of a broader study of the reasons for differing performance between fund types, has been conducted under the auspices of the Council of Financial Regulators. The research is published in the latest edition of APRA’s Insight.
The research, based on a detailed survey of superannuation trustees, found that there was little difference between the Corporate, Public Sector, Industry and Retail sectors in many areas of trustee policies and practices. In some areas, however, there were statistically significant differences between the sectors, with Retail trustee practice more often different from that of the other sectors.
Some of the findings of the research include:
- Trustee directors of the large funds in the survey were typically well qualified, experienced and reasonably well trained in their trustee duties.
- Most boards (76 per cent) have both independent audit and regular self-assessment to review compliance with the Superannuation Industry (Supervision) Act 1993 and other regulations.
- Service providers are widely used in the superannuation industry, with the average fund using more than 13 service providers. Over 60 per cent of Retail directors have one or more associations with service providers, a figure that is double that for directors of Corporate funds and almost three times that for Public Sector or Industry funds.
- Relative to the other trustees, Retail trustees have fewer directors, shorter (but just as frequent) board meetings, and rely more on fund executives to take the initiative on most key decisions. By contrast, trustees in the other three sectors mostly make the decisions with the main input coming either from themselves or from their consultants.
- More than half of all Retail trustee directors are employed by related parties or by the fund itself, and very few are nominated by fund members. By contrast, many Industry, Corporate and Public Sector trustee directors are member-nominated.
- More than half of Corporate, Public Sector and Industry trustee directors are themselves members of their funds. About one in five Retail trustee directors are members of their funds.
APRA Deputy Chairman Ross Jones says this is the most authoritative and comprehensive research of its type into governance practices within Australia’s major superannuation funds.
‘The research provides the superannuation sector with some important insights into how trustees and boards are governing funds. Importantly, it shows that all superannuation sectors, generally speaking, seem to be successful in selecting experienced and qualified trustee directors.’
The latest edition of APRA’s Insight also contains some detailed information on the housing lending portfolios of authorised deposit‑taking institutions, based on a survey of housing loan approvals during the month of September 2006.
The Insight publication is available from APRA’s website at: www.apra.gov.au/Insight.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $3 trillion in assets for 21 million Australian depositors, policyholders and superannuation fund members.
Media and industry inquiries only:
Stuart Snell, Head of Public Affairs
Australian Prudential Regulation Authority
Telephone: 02 9210 3384
Mobile: 0407 250 276
All other inquiries:
APRA Contact Centre 1300 131 060.
