APRA focused on retirement income performance data

The Australian Prudential Regulation Authority (APRA) has signalled its intention to publish more comparative data on retirement product performance.

Despite the urgings of the Financial Services Council (FSC) not to seek to extend the superannuation performance test to retirement income products, APRA deputy chair, Margaret Cole said the regulator intends to provide further insights on retirement product data over time, including next year’s Comprehensive Product Performance Package.

Addressing a Canberra conference on retirement, Cole said APRA is improving transparency in  retirement product performance data, noting that it recently published data on retirement phase products for the first time captured the performance data for 600 multi-sector options.

She said this served to enhance transparency of investment returns, fees and costs and investment strategies at a product level.

“As well as shining a light on the performance of individual products, we expect access to more detailed retirement product information will help foster greater competition and innovation among trustees,” Cole said.

The APRA deputy chair also indicated regulatory concern about the numbers of superannuation fund members still opting to take lump sums upon retirement.

Commenting on the need for superannuation funds to provide adequate easy-to-understand information about the options available to them and guidance on retirement planning, she suggested that most people were not adequately informed.

“Do most members approaching retirement have that confidence today? The answer would have to be a resounding ‘no’,” Cole said.

“Members who make decisions absent support or information may not necessarily be acting in their own best financial interests. For example, a significant share of members draw down a lump sump from their super in part or in full at the point of retirement,” she said.

“While there can be good reasons for making this decision, say to pay off a mortgage, and each individual’s circumstances are unique, there is also the potential risk of missing out on the compounding and tax advantages of keeping funds in the superannuation system in retirement.”