APRA highlights strategic challenges for some trustees in promoting member outcomes over the longer term

The Australian Prudential Regulation Authority (APRA) has published insights into challenges facing some superannuation trustees in operational efficiency, growth, and competitive positioning.

In the paper “Delivering member outcomes into the future”, APRA discusses dynamics shaping the ongoing evolution of Australia’s superannuation system. These include:

• continuing industry consolidation leading to the reduction in the number of funds;
• ongoing growth in the size of the superannuation system, with recent growth concentrated in the largest funds;
• expense ratios trending downwards at an aggregate level, but material difference across funds; and
• significant differences across funds in terms of natural cash flows and rollover dynamics.

The paper emphasises the importance of trustees actively considering these challenges as part of their strategic and business planning.

APRA Deputy Chair Margaret Cole said consideration of the challenges should also take into account trustees’ focus on delivering strong returns for members and investing for business and risk objectives, such as expanding support to members approaching retirement and putting a strong focus on operational risk and cyber resilience.

“Some super trustees face multiple challenges, not just in relation to matters that affect all super trustees, but specific to their own circumstances. They must have credible strategic plans to face and address the challenges in the best interests of members. Consistent with APRA’s approach over many years, such trustees can expect ongoing engagement from APRA to ensure credible strategic plans are in place and that long-term outcomes for member are firmly front of mind,” she said.

The insights paper is available on the APRA website at: Delivering member outcomes into the future, together with the underlying data referenced in the paper.