Go to top of page
Legislated outcomes assessment and Prudential Standard SPS 515 Strategic Planning and Member Outcomes – frequently asked questions
APRA has released three frequently asked questions (FAQs) on the development of Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) and the introduction of an annual outcomes assessment resulting from recent legislative changes to the the Superannuation Industry (Supervision) Act 1993.
The below FAQs will focus on APRA’s expectations for registrable superannuation entity (RSE) licensees undertaking the first annual outcomes assessment, and APRA’s timeline for finalising SPS 515 and engaging with RSE licensees on its implementation.
1. What time period is an RSE licensee expected to use for the first annual legislated outcomes assessment?
In early April 2019, the Superannuation Industry (Supervision) Act 1993 was amended to replace the MySuper scale test with an annual outcomes assessment. Under the new provisions, an RSE licensee is required to annually determine for each MySuper and choice product whether the financial interests of the members that hold the product are being promoted.
The legislation provides an RSE licensee with discretion as to which 12 month period they utilise for the purposes of meeting the annual outcomes assessment requirements under section 52 of the SIS Act. The 12 month period could be the calendar year, financial year, income year for the RSE licensee or any other 12 month period. The 2019-2020 financial year is likely to be the appropriate first period for the majority of RSE licensees, as this aligns with their income year.
Upon finalisation of Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) APRA plans to release supporting prudential guidance which will include APRA’s expectations for timing of the annual outcomes assessment and alignment with the business performance review under SPS 515. APRA’s supervisors are already engaging with RSE licensees on their approach to assessing member outcomes, including implementation of SPS 515 and preparation for the outcomes assessment.
2. When does APRA expect to finalise SPS 515 and supporting guidance and will APRA maintain the 1 January 2020 commencement?
APRA plans to release the final SPS 515 and supporting prudential guidance in the third quarter of 2019. Given the key elements of SPS 515 are likely to remain largely unchanged, APRA expects to maintain the standard's current effective date of 1 January 2020.
3. APRA has indicated that supervisors will be engaging with RSE licensees on implementation of SPS 515. What will be expected of RSE licensees in this engagement and when will it occur?
APRA supervisors will continue to engage with RSE licensees over the second half of 2019 on their preparations for commencement of SPS 515 on 1 January 2020. Consistent with the messaging to industry in December 2018, APRA expects that by the fourth quarter of 2019, all RSE licensees will have updated, or be in the process of updating, their strategic objectives, business plans and expenditure management processes, so as to comply with the new standard from 1 January 2020. These components of SPS 515 were finalised in December 2018, providing RSE licensees with a 12 month period to be ready for commencement.
For the proposed business performance review (BPR) requirements, APRA supervisors will be seeking from RSE licensees an understanding of their proposed design and their plans for the timing of their first BPR, required to be undertaken by 31 December 2020. In particular, supervisors will seek information on cohort construction, benchmarking, data sources and alignment with the business planning process. APRA expects that an RSE licensee will approach the design of the BPR as one of continuous improvement, encompassing the identification of new and enhanced sources of data.
APRA will also seek to understand how the RSE licensee intends to undertake the legislated outcomes assessment for each of its MySuper and choice products, including the timing and publication of the assessments and data sources.