APRA urges quarterly valuations on super funds

Mike Taylor

Managing Editor and Publisher

21 July 2023

Amid concerns about how frequently superannuation funds revalue their unlisted assets, the Australian Prudential Regulation Authority (APRA) has told them it expect funds to undertake valuations on at least a quarterly basis.

In guidance issued this week it said that where a superannuation fund chose to undertake valuations less frequently, it expected the fund to “demonstrate how it has determined the valuation frequency is appropriate”.

The regulator also made clear that it expects superannuation funds that take investment management in-house, it expects that it resources and staffs the function in similar fashion to external investment management.

On the question of the valuation of investments, the APRA guidance said that superannuation fund licensees would consider triggers that would warrant more frequent valuations including market volatility and the external operating environment, including changes in Government policy settings.

“APRA expects an RSE licensee would ensure that all valuations are received within a timeframe that supports active oversight and timely implementation of valuation changes. For example, an RSE licensee would seek to ensure that valuations are received in line with, and ahead of, common performance measurement periods, such as end of calendar quarters,” it said.

“APRA expects an RSE licensee would determine the circumstances in which valuations would be reported to the Board and management.”

On the question of in-house investment management, the APRA guidance states: “Where an RSE licensee operates some, or all, of its investment functions internally, APRA expects an RSE licensee would be able to demonstrate that it has systems, resources and processes that support the appropriate management of risk commensurate with services provided by highly-skilled external service providers”.