APRA

Big and small funds alike can do well for their members, and what’s more important than size is how they use it. But the risks of having a highly concentrated industry have been “underplayed”, according to ANU academic Geoff Warren.

As Australian superannuation assets approach A$4 trillion, politicians on both sides of the divide will be tempted to dip into this massive nest egg to meet their fiscal needs, writes Rob Prugue.

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.