APRA

Basing an investment strategy on the goldilocks investment markets of the last 35 years gives rise to considerable risk, writes Michael Block, and now might be the time to get out of growth assets.

APRA’s “utopian ambition” for organic super fund consolidation might not be realised, leaving a long tail of small funds. More drastic measures could be needed.

While APRA “doesn’t feel the need to start each year with a shiny new set of initiatives”, it’s still planning on scrutinising super funds’ valuation practices and giving more “sub-scale” funds the nudge to merge in 2023.

The CEO of AustralianSuper says the Morrison Government doesn’t get enough credit for introducing the YFYS reforms, and that funds need to stop arguing over its detail and get on with the business of performing against the benchmarks.

Passing the performance test is no excuse for not merging, according to APRA, and the prudential regulator will still be giving small funds the nudge to consolidate where they feel their size isn’t sustainable.

The prudential regulator’s superannuation czar says it has no view on whether smaller funds can survive – but that funds must continue to innovate to avoid becoming “footnotes in financial history”.

Labor and the superannuation industry are still running their victory lap, but concerns around disclosure and consolidation loom large in the background.

Fewer funds failed the Your Future Your Super (YFYS) test than last year – but plenty of passes have come from managing to the constraints of that test.

APRA has issued Vanguard a superannuation licence as it prepares to launch a disruptive play for Australia’s gargantuan retirement savings pool.

The Albanese Government has begun to explore the potential negative impacts of super fund consolidation. The question is whether a super fund can ever be too big to fail.