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APRA looks to enhance strategic planning and member outcomes in super

Monday 1 August 2022

The Australian Prudential Regulation Authority (APRA) has proposed a range of changes to update and sharpen its prudential standard governing strategic planning and member outcomes in superannuation.

Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) requires trustees to evaluate their performance in delivering quality outcomes to members. As part of the annual Business Performance Review, trustees must also consider whether they will continue delivering quality outcomes into the future and take steps to address any areas needing improvement.

Although SPS 515 only came into effect at the beginning of 2020, the pace of change in the industry and its regulatory and legislative settings, as well as APRA’s observations of how the standard is operating, have prompted APRA to revisit its design. 

In a discussion paper, Strategic planning and member outcomes – proposed enhancements, released today, APRA has proposed updating SPS 515 to make it more effective and simpler for trustees to understand and implement, including:

  • strengthened requirements to ensure trustees deliver quality outcomes to all cohorts of members in a more measurable way; 
  • increased board oversight of financial projections and closer monitoring and management of financial resources in an integrated way that better reflects their risk profile, and nature of their business; and
  • ensuring timely action is taken to address areas of underperformance including transferring members to better performing products or funds.

APRA’s review also encompasses the accompanying prudential guidance: Prudential Practice Guide SPG 515 Strategic and Business Planning and Prudential Practice Guide SPG 516 Business Performance Review.

APRA Member Margaret Cole said: “SPS 515 sought to instil in superannuation trustees a culture of continuous improvement, where even the best performers are always looking for ways to further improve outcomes for members. 

"While we have seen clear evidence that SPS 515 has contributed to greater efficiency in the industry, increased consolidation and better outcomes for members, there is still more to do. 

"In particular, as the industry’s approach to SPS 515 matures, we are less interested in seeing their plan on paper, and more interested in seeing evidence that it’s working in members’ best financial interests,”
Ms Cole said.

In reviewing SPS 515, APRA’s approach is informed by plans to modernise the prudential architecture to deliver a simplified yet more cohesive framework that provide trustees with greater clarity and flexibility to meet their obligations. 

After considering submissions on the discussion paper, APRA intends to release draft enhancements to the SPS 515 framework early next year for a further round of consultation.

Copies of the discussion paper are available on APRA’s website at: Strategic planning and member outcomes: proposed enhancements.

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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 $7.9 trillion in assets for Australian depositors, policyholders and superannuation fund members.