APRA and ASIC warn super funds on retirement measures

Mike Taylor

Managing Editor and Publisher

2 July 2024

The Australian Prudential Regulation Authority (APRA) has expressed concern at a lack of progress being made by superannuation funds in tracking the success of the Retirement Income Covenant strategies.

APRA deputy chair, Margaret Cole has said that without effective success metrics, super fund trustees could now not know if their strategies are working and members deserved better.

At the same time, the Australian Securities and Investments Commission (ASIC) commissioner, Simone Constant said trustees have a pivotal role to play improving retirement outcomes for their members.

The two regulators revealed that a recent pulse check had identified a lack of urgency by trustees in embracing the RIC.

It found that significant gaps remain.

As part of a follow-up survey of the broader superannuation industry, APRA and ASIC asked trustees to share their response to the recommendations and findings from the thematic review to assist members who are retired or approaching retirement as required under the covenant introduced in 2022.

Key observations from 48 survey responses, representing all trustees invited to participate, include:

• While approximately three quarters of trustees indicated that measuring retirement outcomes was a priority, only incremental progress had been made to measure and track retirement income strategies. Just eight trustees said tracking the effectiveness of retirement-focused assistance to members was a priority.
• Many trustees were taking steps to better understand the retirement needs of their members and had endeavoured to promote the availability and access to retirement-focused information for members. However, only one in five planned improvements identified by trustees were expected to be completed by mid-2024.

It said the responses from trustees pointed to several challenges in implementing the covenant, including uncertainty around the financial advice framework, privacy, security, and cost concerns on collecting more member data, and a lack of member engagement and financial capability.