After a 4 ½ month “pandemic break”, APRA is poised to push the start button on its policy initiatives, and in so doing will put the cat amongst the pigeons. The industry will be asked to do a lot, in a short period of time and in uniquely difficult circumstances.
While the recommencement of APRA activities potentially involves a wide range of programs, APRA is going to be concentrating its attention on a small number of “high-priority prudential policy reforms”. One reform, in particular, is going to require immediate and priority attention from super funds.
While APRA has deferred data collections from funds until September 2021, it continues to assess the pilot data previously received and plans to release four more topic papers very soon in relation to the following:
- Fees and costs disclosed
- Standard insurance arrangements
- Expense reporting
- Asset allocation
Whilst the industry will be asked to comment on each of these topics, individual super funds will also be required to collect pilot data in each area. So, what hurdles does this present?
- Hurdle 1 – The Double-Edged Data Sword
Asking for comment on data reporting at the same time as requiring data to be reported is challenging when the requirements are new or contentious.
Fee disclosure has been a contentious issue in super for a decade and remains so. Insurance reporting has been a problem area for APRA and remains so. Elements of expense reporting will be new and likely to raise many questions and issues of consistency and comparability in these areas are also raised in relation to asset allocation.
- Hurdle 2 – The Choice Product Clean-up continues
While expanded reporting for MySuper products has been a thing for a while (and is used to populate the MySuper Heatmap) – central to the Superannuation Data Transformation initiative was the expansion of data reporting to each Choice product and investment option. Despite many projects to clean up and rationalise small and legacy products, there are still more than forty-thousand of these.
- Hurdle 3 – An already difficult and challenging track
There’s a pandemic going on, and Melbourne is in hard lockdown! There are limits to the extent to which many funds and administrators are able to do things as quickly and as easily as they once were. It’s not just the immediate effort required to meet the requirements but the increased effort involved in other areas, such as managing Year End.
We understand that it’s important for APRA to get more and better data from super funds in order to improve visibility of fund performance and the industry generally. However, this needs to be balanced with a realistic appreciation of the impact of the current environment and the magnitude of this task.
Luckily, IQ is full of consultants who have been on SuperStream, data reporting, insurance, PYSP/PMIF and other data management journeys over the past decade.We not only help our customers high jump these hurdles and stay ahead of the pack, but we help them improve their technique in preparation for the many more hurdles to come.
By Katherine Forrest (Head of Capability)