The seeds of APRA’s Superannuation Data Transformation (SDT) project have been sown, and while the industry continues to work hard developing its fields of data (pun intended), we pause to reflect on this challenging, multi-year project and what it will harvest.

Just as our resilient Aussie farmers perform through increasingly complex and accumulating economic, social, environmental and institutional shocks and stresses … so do our super funds. However, we are aiming for more data to prove it!

IQ Group continues to support clients in meeting SDT requirements and navigating one of the most challenging projects that the industry has faced in its history. The project, aimed at driving continuous improvement, addressing underperformance within the industry and ultimately delivering quality outcomes for members, is a third of its way through.

Phase 1 – Complete
The bulk of Phase 1 (which covered the highest priority data issues around choice products and investment options along with expense reporting, insurance arrangements, member demographics and asset allocation classifications) was implemented in September last year.

Phase 2 – In progress
Currently being implemented, the second phase of the project explores new and better approaches to data reporting, across all areas including governance and risk management. The granularity of data collections will increase in order to understand the needs of stakeholders. Also, any issues around duplication, or redundancy of data, will be addressed.

Phase 3 – March 2023
The last phase of the project will review and address any issues with quality and consistency, or unintended consequences of the reporting framework already implemented.

Like other significant projects, the SDT requires a lot of hard work and here’s some of the challenges that the industry is facing:

  • Little capacity to engage with consultations, particularly over the August to September 2022 period due to a number of regulatory changes (such as the expanded performance test).
  • Collecting data from insurers is not directly accessible by funds. Also, the interpretation of insurer details can vary with differences in the default employer data received from insurers.
  • Collecting data from custodians, such as Asset Allocation, is also not always available or may not go to the detailed level expected. Also, custodians are reliant on fund managers for such information.
  • Some data is viewed as ‘confidential’ by funds. For example, expenses incurred in operating the fund.
  • Collecting required data from legacy systems can be difficult as it usually requires the co-operation of other entities.
  • Multiple databases storing data may need to be amalgamated with registry system data and then converted into the required format.
  • Increased pressure to improve practices, keep a low fee base as well as providing adequate returns on member investments – given the scrutiny on improving outcomes for members.

“The data being demanded by regulators is extensive and is only going to grow. APRA is starting to know more about Funds, Trustees, and the products they manage than they do about themselves. If the Trustee/Fund hasn’t already, they need to consider this data as core business, they need to get very good at sourcing, managing, reporting, and analysing data to enable informed decisions for their business and members”.

– Peter McDonald (Principal Consultant – IQ Group)

The SDT initiative is demanding (particularly for an industry that is undergoing increasing mergers and significant change) however, it’s critical for the Regulator, along with all industry stakeholders, to effectively assess the performance of an industry that holds over $3 trillion in member assets and increasing importance in the Australian economy.

With such a large scope, extending to all products and across a wide range of reporting areas, it will be a while yet before members will reap what the industry sows and the project proves it has successfully increased the scrutiny, analysis and accountability of super. However, APRA intends to use the data in MySuper and Choice heatmaps, super fund performance assessments, the YourSuper comparison tool, publications, and prudential supervision and this goes a long way to creating a transparent industry that acts in the best interests of members and also helps government make informed decisions when it comes to changes to super.

With all this considered, perhaps we shouldn’t judge the harvest (from this particular project) by what it reaps, but rather by the seeds that it plants?

By Jocelyn Adolphe, IQ Senior Consultant