APRA Draft Prudential Standards for Superannuation
What do they mean for your RSE?
RSE Licensees now have three large tranches of draft legislation resulting from the Stronger Super reforms that directly impact their business operations and members of their funds.
On 27 April 2012 APRA released eleven draft Prudential Standards for superannuation (Draft APRA PS).
APRA has extended to the superannuation industry the following banking and insurance industry prudential standards:
- Fit and proper;
- Business continuity management;
- Risk management; and
- Audit and related matters.
APRA has introduced the following specific standards for superannuation:
- Investment governance;
- Conflicts of interest;
- Defined benefit funding and solvency;
- Operational risk financial requirements; and
- Insurance in superannuation.
We believe it is important for RSE Licensees to be prepared by considering the Draft APRA PS now and as part of their overall Stronger Super Project Plan, particularly in view of the MySuper releases which were released on 3 May 2012.
APRA says it intends to finalise the standards before the end of 2012. A number of key issues are flagged to be dealt with by way of prudential practice guides (PPGs), with the first tranche being released for consultation towards the end of 2012.
Our high level recommendations on the Draft APRA PS are:
- Be Prepared – most of the legislative and prudential reforms come into effect in July 2013. However, RSE Licensees need to be prepared, particularly as some transitional provisions involving 3rd parties are to commence in December 2012.
- Transitional Provisions – RSE Licensees should consider when and how the transitional provisions in each Draft APRA PS apply to their business operations.
- Board Responsibility – APRA makes it clear that the responsibility for compliance with the prudential standards is placed on the board of the RSE Licensee. Each RSE Licensee should be considering their board and governance training programs and “skilling up” where there are any gaps or improvements required (including training on their obligations and responsibilities under the Draft APRA PS).
- Stronger Super Project Plan – RSE Licensees should consider the requirements of each Draft APRA PS now. RSE Licensees should include action items and timelines for compliance (including transitional provisions) in their overall Stronger Super Project Plan.
To assist RSE Licensees and those involved with the Stronger Super reforms, we have prepared the following high level analysis of the eleven Draft APRA PS.
To read the analysis click here.