APRA flags targeted assessments of super expenditures

The Australian Prudential Regulation Authority (APRA) has again placed superannuation funds on notice that it will continue to focus on their expenditure, including via targeted assessments.

The regulator has made its intentions clear in its 2025/26 corporate plan under the heading of “Intensified supervision of expenditure” noting that “fund-level expenditure will remain a key focus to ensure trustees act in the best financial interests of members”.

“Over the next 12 months, APRA will undertake targeted assessments of expenditure data, and where deficiencies are identified, trustees will be required to make improvements,” it said.

The regulator also specified that it would be taking a targeted review of platform products stating that it is currently undertaking a review to “assess the quality and soundness of trustees’ governance and oversight of investment offered via platforms.

“The review focuses on key areas including due diligence, onboarding, monitoring, and removal of investment options, as well as strategic planning and practices to promote member outcomes,” it said.

“APRA will assess current practices against relevant prudential standards,” it said. “APRA’s findings will be shared with the superannuation industry, highlighting areas where enhancements are expected.”

Looking broadly at superannuation, APRA’s corporate plan said the value of assets managed by the superannuation sector had doubled in the past decade to $4.1 trillion, representing around 150% of GDP.

“Australia’s superannuation system is a large and growing component of the financial system – managing the long-term savings of members during their working lives, delivering income for retirees and playing an important role in funding economic activity through its impact on capital allocation.

“However, the superannuation industry faces growing challenges over coming years. Similar to the banking industry, risks are becoming more complex – continued strengthening of superannuation funds’ governance and operational risk management practices is therefore an area of ongoing regulatory focus. The growth of the sector has also made it more interconnected with other parts of the financial system, which could introduce potential vulnerabilities,” the plan said.

“An ageing population presents new challenges to the superannuation industry as more of its members move to the retirement phase. The Government’s Retirement Income Review found that a high proportion of superannuation benefits remain unspent over the retirement phase, which may lead to a lower living standard in retirement than could otherwise have been achieved.  Improving outcomes for members in retirement remains an area of ongoing regulatory focus.”