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APRA Deputy Chair Margaret Cole - Speech to the AFR Super & Wealth Summit

Fortune favours the brave


Thank you. It’s a pleasure to be here.

The birth of compulsory superannuation three decades ago marked a bold shift in funding for retirement income in Australia.

The Australian Financial Review was among the first to herald the arrival of the superannuation guarantee in 1992, describing the move to the new system as “brave but overdue”. 

As fans of the British satirical comedy “Yes Minister” might recognise, words like “brave” and “courageous” when used by the Whitehall Mandarin Sir Humphrey Appleby in response to the hapless Minister’s latest big idea – as in “that’s brave Minister” – carried something less than positive implications. Fortunately, this brave move fits more in the category of the phrase “Fortune Favours the Brave”.1

For thirty-one years later, that “brave” fledgling system has grown prodigiously – in assets, in fund members, in significance to the Australian economy – and in the expectations placed on it by a population that is growing in size and getting older.  

We’re now at a point where most people under the age of 50 have been accumulating super their whole working lives. And within a generation superannuation will become the primary source of income for the majority of Australians entering retirement. 

Superannuation is coming of age. The “wicked” question is, will super funds be ready to meet the challenges ahead?

A maturing industry

Although operating in what is still a relatively young industry, trustees have had to “grow up” quickly to face three decades of change in superannuation, including the introduction of prudential standards and an evolving legislative framework. 

Funds today are fewer and bigger than they were back in 1992. They operate in a far more complex environment, with stewardship of significantly larger amounts of member funds. 

With a little encouragement super funds have become more focused on delivering better outcomes for members in the accumulation phase. And in the 10 years since APRA introduced prudential standards for superannuation, the industry has made significant strides to strengthen governance, improve industry practices, and address performance issues.

This is to be celebrated. But despite all this progress, gaps remain in trustees’ approach to operational risk and financial resilience, and in their plans to assist the tidal wave of fund members heading fast towards retirement. 

Trustees will need to address – with urgency – critical shortcomings in every stage of the superannuation life cycle to keep pace with the impending demands of the vast and expanding system. It’s a huge responsibility.

Priorities for the super industry

As recommended by the FRAA Review2, APRA is continuing to be transparent with industry about our priorities. To this end this week we are writing to each superannuation trustee to set out a clear forward plan of APRA’s priorities to assist with their business planning for the next 12 months. These letters reflect the profile and risk characteristics of each trustee, having appropriate regard to regulatory load.

These priorities focus on key challenges facing industry including:

  • system-wide risks associated with investment market conditions, particularly in relation to asset valuation and liquidity management practices; and management of climate related financial risks;
  • operational resilience encompassing cyber security and preparedness to manage cyber incidents; and
  • improving retirement outcomes and customer experience.

The letter will also highlight APRA’s focus on recovery, exit and resolution planning in superannuation – another recommendation stemming from the FRAA Review.

This may mean for some trustees, they will have to be brave and bold – some might have to have a fundamental step-change in mindset and capability, as I spoke about earlier in the year. This might mean being a first mover or leading the industry as it tackles new and emerging risks. 

Underpinning these priorities is the need to ensure industry is prepared for the challenges that lie ahead. This means ensuring the industry remains strong and stable and that trustees are positioned and prepared to deliver member-centric outcomes to their growing – and ageing – member base.  

Growing resilience and addressing system-wide risks

A strong and stable super system is vital for the financial protection of fund members and Australia’s social and economic wellbeing more broadly.

Superannuation is an increasingly important driver of national savings. Combined members’ assets have grown more than twenty-fold over the past three decades – from $148 billion to $3.5 trillion. As a percentage of Australia’s GDP, total member assets are projected to grow from 116 per cent, to 218 per cent in 40 years’ time.3 

APRA will continue to build resilience in the super industry through a combination of stronger prudential settings and targeted supervision, and enforcement too where necessary.

We recognise that an inadequate response by trustees to market disruptions and liquidity events could have a significant adverse impact on the financial system and member outcomes. The update to our investment governance standard that came into effect in January this year, makes clear what trustees are required to do: put the best financial interests of their members at the centre of investment strategies and decisions. To do this, trustees must have in place strong investment governance policies - including strong valuation governance. 

Our recent review of how trustees valued their investments in unlisted asset Canva also highlighted areas where improvement is needed – including interim revaluation triggers in valuation policies. APRA has used the findings of the Canva review to inform planned thematic reviews on unlisted assets and liquidity risks, and to further develop APRA’s approach to stress testing. 

APRA is also doubling down on trustees’ approach to operational risk. Under new requirements that will take effect in 2025, trustees must: identify and manage risks in their end-to-end processes; be able to continue to deliver critical operations such as investment management and fund administration during severe disruptions; and manage any risks associated with outsourcing to third parties.

One risk that needs greater attention across the financial services industry is cyber risk. APRA introduced a prudential standard for all APRA-regulated entities – CPS 234 Information Security – back in 2020. You’d rightly expect that three years down the track, and after a spate of damaging and high-profile cyber incidents, all entities would have prioritised investment in uplifting their cyber defences. As the early findings from APRA’s study on cyber resilience in financial services showed4, gaps still remain and there is work still to be done. 

Let me be clear; APRA will not shy away from taking action against entities that have breached our requirements. 

We are also strengthening trustee resilience through new recovery, exit and resolution planning requirements. For super entities, which are not as well versed in the concept of recovery planning as banks or insurers, this may be challenging. But in a year in which we’ve seen increasing geopolitical tensions, global market volatility, the collapse of Silicon Valley Bank, and high-profile cyber-attacks, the importance of a sharper focus on crisis preparedness in superannuation will not be lost on trustees. 

Under the requirements trustees must have well-developed and robust recovery and exit plans to respond to a crisis. Or, in the unlikely event that a large or complex entity becomes non-viable trustees will need to be ready to support APRA in resolving matters in a manner that protects fund members. 

Driving greater accountability

Building financial and operational resilience in superannuation entities is, ultimately, the responsibility of trustee boards. 

Trustees must step up and be accountable; they must have greater oversight of the risks their organisations face and oversee strategies to deliver better outcomes for their members.

As I mentioned earlier, we will use the tools available to us – whether from our supervisory or enforcement toolkit. We have for some time been building our enforcement capability, hiring new team members – including a Head of Investigations and Enforcement.

As an independent regulator we will make our decisions and take action without fear or favour. We will continue to investigate potential breaches of the prudential or legislative framework and will take enforcement action where appropriate as part of ensuring accountability and sending important messages by way of deterrence. Unlike our sister agency, ASIC, as a prudential regulator we won’t be enforcement led but we will not shy away from fulfilling our mandate to make sure that superannuation trustees are managing people’s money in their best financial interests. 

The Financial Accountability Regime, which comes into effect for super in March 2025, will assist in shifting the dial on accountability in the superannuation industry. 

The regime will significantly strengthen responsibility and accountability for APRA-regulated entities. And not just accountability for the entities; directors and the most senior executives will also be held to account, too. 

Better member outcomes through transparency

Transparency is a powerful tool and something that we all know is key to improving member outcomes. To that end, APRA has continued to collect and publish data, shining a bigger and brighter light on fund performance in investment returns, fees and costs. In fact, in 2023 APRA has collected and published more superannuation data than ever before. 

Since the inaugural MySuper product performance test, the number of products failing the performance test benchmarks has fallen from 13 in 2021 to just one this year. As a result, nine underperforming MySuper products have exited the market and a total of 800,000 members, with combined assets of $39 billion, have moved to better performing products.

With the performance test extended to trustee directed products this year, and the heatmaps extended to choice products in 2021, there is even greater light being shone in the super sector. The Performance Test results this year showed 96 out of 805 trustee directed products failed to meet the performance test benchmarks5. To their credit, some trustees with multiple failed products have acted promptly to improve outcomes to members by rationalising their offerings. We will monitor such activity closely and other actions taken by trustees to stamp out poor product performance in the choice sector.

For 2024, APRA will further enhance public scrutiny of super fund performance, by aligning the performance test and heatmap publications – and the underlying data sets. This will provide a comprehensive review of superannuation fund performance and create greater efficiencies for the industry and APRA.

We want to see greater transparency in superannuation in other ways too, such as publishing as much of the data we collect as possible in an accessible way.

We recently began consulting with trustees on proposals to publish total fund expenditure. This would mean publishing individual funds’ expenses related to marketing and sponsorships, industrial bodies, related parties, director and executive remuneration, and political donations by payee or service provider. We’re also seeking to publish asset allocation data for investments in property and infrastructure, alternative strategy funds, listed equity and private equity.

Retirement outcomes 

One of our most pressing priorities for this industry is addressing shortcomings in trustees’ approach to the retirement income phase.

For an industry that exists to support Australians in retirement, there is a surprising lack of readiness to meet the needs of the rising tide of retirees that are beginning to draw on their superannuation. 

It isn’t as if the industry has been caught off-guard. The consequences on retirement funding of an ageing population has been a discussion point for decades. Trustees, themselves will have seen the steady rise in fund members reaching retirement age. Since 1992, the proportion of Australians aged 65 or over has grown from 11 per cent to 17 per cent6.

APRA and ASIC recently examined the progress of 15 trustees in implementing the Retirement Income Covenant following its introduction in August last year. 

Our review found that trustees were certainly thinking about and improving their strategies for fund members in retirement but not with the urgency that the situation requires. 

We were also disappointed by the variability in quality and depth of research and data, and therefore, the lack of member-centricity underpinning the design of some retirement income strategies.  

The review identified the need for greater focus and improvement in:

  • understanding member needs;
  • designing fit-for-purpose assistance; and
  • overseeing strategy implementation. 

The point on understanding member needs has sparked some conversation from trustees about the challenges of collecting more detailed data from members. 

We recognise some of these challenges are real and will take some time to work through, however there is much more that trustees can do now with the wealth of data and information they already hold. For example, trustees will have access to administration and transaction data which they can use to explore current drawdown rates and patterns. Similarly, they have access to activity data which will show how members interact with the fund and the services and products offered. 

When we published the review in July, we made it clear that we expected all trustees to reflect upon their retirement income strategies. 

A process to learn more about what actions trustees have taken to address gaps in their approach will be launched soon. 

We want to see a shift in mindset by trustees to embrace the retirement phase as an integral part of members’ experience of superannuation.

Evolving regulation

Much of what I have discussed today involves sharper supervision and tighter regulation. As the industry evolves, so too must the rules and regulations that govern it. 

APRA recognises industry concerns about “over-regulation”. Through initiatives such as modernising the prudential architecture, APRA is working to make the regulatory framework clearer, simpler and more adaptable for all APRA-regulated industries. We are also taking a proportionate approach to reduce regulatory burden on smaller, less complex entities. 

But the reality is that the Australian community expects the super industry to be held to account, so in considering how we can reduce burden there is always a balance to be struck.

Super is an industry that has stewardship of trillions of dollars which it receives on a mandated basis; it has a large proportion of disengaged fund members whose financial interests need to be protected; and its fund members should reasonably expect that their superannuation savings will be safe and managed in their best financial interests, and that the service they receive will be commensurate with their needs.


Super funds play a core role in a system that is fast approaching a pivotal point in its history. 

In the face of expansive growth in both assets and retirees, trustees have a narrowing window to prepare for the challenges – and opportunities – that lie ahead.

Fund members, at every stage of the superannuation life cycle, will depend upon their super funds to manage risks well, to grow and protect their savings, and to support their needs for a comfortable retirement. It is in everyone’s best interests to have a well-governed, member-focused, resilient industry. 

The Australian superannuation system as it comes of age is a prized possession. But its social licence is not a given – it needs to be renewed and given new vigour. That will require trustees to show foresight, and step up to the challenges with courage and commitment.

In this respect, once again, fortune may well favour the brave.


1  Australian Financial Review, 1 July 1992, A brave, but overdue, move on superannuation

2  APRA welcomes the release of FRAA report

3  Intergeneration Report 2023 – 7.5 Retirement income system

4  Cyber security stocktake exposes gaps

5  The 2023 annual superannuation performance test - trustee directed products

6  Australian Institute of Health and Welfare,  Profile of Australia’s Population, June 2023 


Margaret Cole

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.