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APRA consults on the use of reserves in superannuation funds

Wednesday 29 April 2009



The Australian Prudential Regulation Authority (APRA) has today released draft guidance on the management of reserves by APRA-regulated superannuation trustees.

A discussion paper and draft Prudential Practice Guide 235 Use of reserves in superannuation funds (SPG235) have been provided for consultation prior to finalisation of the guide later in 2009.

The Superannuation Industry (Supervision) Act 1993 (SIS Act) contains provisions relating to the maintenance and management of fund reserves. Trustees and their directors are required to develop and implement a strategy for the prudent management of these reserves.

APRA Deputy Chairman Ross Jones said: ‘The draft guide provides practical guidance on measures APRA would regard as good practice for a trustee and its directors to take in respect of management of fund reserves. It provides examples of specific types of reserves and outlines measures for inclusion in a reserving strategy.’

Reserves are not defined in the SIS Act. The draft SPG235 distinguishes between amounts set aside for contingent events and provisions for accrued expenses such as administration or taxation. It also focuses on measures a trustee might consider in formulating a comprehensive reserving strategy.

APRA invites interested parties to comment on the draft guide by 5 June 2009. The guide is available on the APRA website. 

APRA will be releasing further superannuation prudential practice guides shortly as part of a review of existing guidance notes and circulars.

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, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.