Regulators warn super funds on unlisted assets

APRA is taking a close look on the revaluation of super funds’ unlisted assets and discretionary spending practices.

Super funds are “under the microscope” according to an APRA executive.

Super fund regulators are stepping up their focus on the growing amount of unlisted assets held by superannuation funds.

In a speech to the annual conference of the Association of Superannuation Funds of Australia,

Australian Prudential Regulation Authority executive director of superannuation, life and private health insurance Carmen Beverley-Smith said the agency was concerned about continuing issues with the valuation of unlisted assets held by super funds.

She said this included a “lack of clear triggers” on the revaluation of unlisted assets by some super fund trustees, with the valuation of unlisted assets such as private equity and credit and property and infrastructure not occurring often enough.

She said APRA was finalising a review of the asset valuation and liquidity management practices for a cross-section of large and mid-size super funds which had significant exposure to unlisted assets.

“We expect to share those findings soon,” she said.

She said APRA believed there was “significant room for improvement” by super funds in key areas such as how investments and spending were managed, how funds perform and how well funds understood members’ needs.

“Superannuation is an industry under the microscope,” she said.

“With the industry continuing to expand and more Australians heading towards retirement, the need for trustees to address weaknesses and build resilience in their funds is becoming ever more urgent,” she said.

She said APRA was also taking a close look at how super funds spent their money.

This included a focus on how funds were spending on discretionary items such as travel, entertainment and conferences.

“We do not intend to review every dollar spent but where an expenditure is reviewed, (funds) can expect that we will seek information that demonstrates the expense was made in the best financial interests of their members,” she said.

Originally published as Regulators warn super funds on unlisted assets