On Jul. 31, 2024, AST GVT registered Prudential standard SPS 515 strategic planning and member outcomes (SPS 515), explanatory statement, re above; in force Jul. 1.
In Aug. 2024, AST ASIC and APRA spoke about retirement outcomes, see #222961.
AST APRA proposed to strengthen a core prudential standard in order to enhance member outcomes in superannuation; published discussion paper to seek feedback.
Follows AST APRA, AST ASIC Aug. 2023 spoke re better retiree outcomes, #181580.
Discussion paper - strategic and transfer planning: enhancing member outcomes; draft Prudential standard SPS 515 strategic planning and member outcomes (SPS 515).
As well as draft Prudential practice guide SPG 515 strategic and transfer planning (SPG 515); draft Prudential practice guide SPG 516 business performance review (SPG 516).
Discussion Paper
This paper outlines proposed enhancements to the superannuation prudential framework to strengthen strategic and business planning as well as transfer planning.
Responds to feedback from AST APRA’s 2022 discussion papers, and relevant findings.
Proposed Enhancements to SPS 515
Proposed enhancements to SPS 515 include revisions, in particular, in order to ensure that expenditure requirements better align with the best financial interests duty.
In addition, in relation to the retirement phase, revisions to support the retirement income covenant; revisions to reflect supervisory observations on areas where industry needs to lift the bar, with a particular focus on management of financial resources.
Proposed enhancements include revisions to, in particular, improve management of risks to members being transferred across funds, in context of greater transfer activity.
AST APRA also plans to retire 2001 Superannuation circular III.A.4 sole purpose test.
It is not currently minded to issue new guide on sole purpose test, #86258, #71214.
Expects registrable superannuation entity (hereafter referred to as RSEs) licensees have evolved, with experience, and that they are well-placed in order to make robust decisions consistent with legislative duties, capable of standing up to scrutiny.
Proposed Enhancements to SPG 515, SPG 516
Proposed enhancements to simplify and streamline guidance are contained in draft SPG 515 and draft SPG 516; it said the proposed enhancements are also connected to recovery and resolution requirements; AST APRA plans to retire SPG 227 (#153246).
Namely, Prudential practice guide SPG 227 successor fund transfers and wind-ups.
AST APRA proposed to incorporate guidance about undertaking a successor fund transfer (also referred to as SFT) in broader transfer planning guidance in SPG 515.
The integrated draft version of SPG 515 and SPG 516 each maps AST APRA's guidance to the relevant paragraphs in SPS 515; paragraphs from SPS 515, which are enforceable requirements, have been set out in blue boxes in the integrated versions.
Accompanying guidance is contained outside of blue boxes in the integrated versions.
AST APRA Comments
SPS 515 goes to the heart of what trustees need to do; updating the standard will ensure trustees have robust business operations and are held to account to deliver.
Specifically, to deliver outcomes that are in best financial interests of their members.
Next Steps
AST APRA said it expects to finalize the SPS 515 framework by the middle of 2024.
In addition, it expects finalized SPS 515 framework will commence on Jan. 1, 2025.
Consultation End
The comment period for this consultation closes on Dec. 21, 2023.
Jul. 4, 2024 Response, Revised SPG 515, SPS 515
On Jul. 4, 2024, AST APRA issued revised Prudential practice guide SPG 515 strategic planning and member outcomes (SPG 515), and revised Prudential standard SPS 515 strategic planning and member outcomes (SPS 515) regarding the proposals above.
The revised SPG 515 as well as revised SPS 515 will take effect from Jul. 1, 2025.
In addition, AST APRA published Response paper - strategic planning and member outcomes, which is AST APRA's response paper on the proposed enhancements above.
Industry submissions were generally supportive, highlighted a range of key matters.
Specifically, key matters with respect to expenditure; retirement income strategy review; non-financial outcomes; sole purpose test; business planning; monitoring strategic objectives and business plan; as well as MySuper assets transfer plan.
In addition, AST APRA said it also considered a number of minor requests for further clarification which are reflected in the revised versions of SPS 515 and SPG 515; AST APRA also changed commencement date to Jul. 1, 2025, in response to submissions.
AST APRA said matters raised in submissions included concerns that the removal of the reference to significant in the context of expenditure within SPS 515 would lead to onerous requirements on trustees to justify all expenses to the same degree.
Plus, AST APRA’s expectations for a proportionate approach have been clarified in guidance; matters raised also included further clarity on AST APRA’s expectations.
Namely, relating to reviewing retirement incomes strategies i.e. the review of strategy itself and reviewing the outcomes of the strategy; and a tension between AST APRA’s reference to non-financial outcomes and the best financial interests duty (BFID).
Specifically, for which the ultimate determinant is financial outcomes; AST APRA added further clarification to guidance to make clearer the expectations of RSE licensees.
Jul. 31, 2024 AST GVT Registered SPS 515
On Jul. 31, 2024, AST GVT registered Prudential standard SPS 515 strategic planning and member outcomes (SPS 515), explanatory statement, re above; in force Jul. 1.
In Aug. 2024, AST ASIC and APRA spoke about retirement outcomes, see #222961.
