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Tuesday, 8 May 2018
Page: 3365

Superannuation

(Question No. 897)


Ms Sharkie asked the Minister for Revenue and Financial Services, in writing, on 5 February 2018 - To ask the Minister for Revenue and Financial Services—What Government financial protections are available to superannuation account holders if (a) there is a major economic downturn, (b) their related registerable superannuation entity becomes insolvent, and (c) their account is with an employer-run superannuation fund and the employer goes bankrupt


Ms O'Dwyer: The answer to the honourable member's question is as follows:

Superannuation account holders are afforded general protections under the prudential and regulatory framework for superannuation, primarily set out in the Superannuation Industry (Supervision) Act 1993. The framework is designed to ensure that trustees bear the primary responsibility for the viability and prudent operation of superannuation funds and that they make decisions in the best interests of all the members of a fund.

This framework takes a proactive and preventative approach to corporate trustee insolvency. Under the Australian Prudential Regulation Authority's (APRA) licensing regime, superannuation fund trustees need to demonstrate that they meet minimum standards of fitness and propriety, possess adequate resources and have appropriate systems in place to manage the fund. These include mechanisms to identify, measure and manage risks to the trustee and to the fund and apply equally to trustees of all types of superannuation funds, including employer-sponsor and corporate funds.

Trustees of regulated superannuation funds are also required to formulate an investment strategy that has regard to the risk and return of the fund's investments, expected cash-flow requirements, diversification and liquidity of investments, and the ability of the fund to discharge its liabilities. Given the long term and compulsory nature of superannuation, maintained until retirement, trustees of superannuation funds are able to manage market volatility over time through a progressive rebalancing of their investment strategies, in response to changes in market conditions.

APRA has a number of powers to ensure compliance with trustees' regulatory requirements which are proposed to be further strengthened through the Treasury Legislation Amendment (Improving Accountability and Member Outcomes in Superannuation) Bill 2017. The proposed new directions powers will allow APRA to intervene, at an early stage, to address prudential concerns in a manner that ensures funds act in the best interests of members.