APRA

With industry funds feeling the heat from APRA, it’s likely more members will look for a better option, especially if they are nearing or in retirement. Those choosing to do so need to tread warily.

APRA is looking at the big picture – the stability of the banking system. So, while its proposal to phase out hybrids might make sense from that perspective, it’s going to deprive many of an investment option that has delivered healthy income streams.

SMSFs endured years of being accused of having high fees that cost their members’ balances dearly. Not only was it false, but now APRA fund members have revealed a deep ignorance of just what fees they’re paying and what it’s costing them. Quite clearly, their funds are failing to tell them the full story.

For APRA, bigger always seems to be better. But as this state of the nation report into superannuation highlights, size doesn’t count for everything when it comes to delivering member benefits.

The value of Australian’s superannuation pool rose to a record high of $3.62 trillion in the June quarter, a highlight of the managed funds industry’s surging overall performance over the past year as rising rates and rebounding markets improved asset values.

Super funds are failing in their primary duty of understanding customers’ retirement income needs and aren’t doing enough to address known data gaps, the regulators said, criticising their slow progress under the retirement income covenant.

With new data showing offshore share investments comprise just 2 percent of total self-managed superannuation fund assets in Australia, advisers are warning SMSFs against overreliance on domestic shares and cash and urging diversification.

The regulator found 45 per cent of Choice super options underperformed the heatmap benchmarks in 2022, while one in five underperformed significantly. It also put trustees on notice that it’s stepping up scrutiny of poorly performing Choice products.

Treasury’s plan would increase the headline tax rate to 30 per cent from 15 per cent for earnings on superannuation balances above $3 million. The SMSF Association and others have called it unsustainable and discriminatory to SMSFs.

The prudential regulator will more closely examine the valuation methodologies super funds deploy to value private assets to address an emerging gap between the performance of listed and unlisted property.