Stamping out unit pricing errors

South Australian Liberal Senator Grant Chapman has called on the Government to mandate uniform unit pricing for all public offer superannuation funds.

Chapman, who is also a chairperson on the inquiry into the structure and operation of the super industry, welcomed AustralianSuper’s decision to move to daily crediting rates from a monthly scheme.

“One of our recommendations is that the Government mandate a uniform unit pricing methodology for all public offer superannuation funds, including transitional arrangements, with improved operational risk parameters identified and implemented by APRA [Australian Prudential Regulatory Authority],” Chapman said.

“Although not mandated yet, I applaud the AustralianSuper decision and will be advocating that the Government take stock of our inquiry and implement this recommendation along with the other sensible and far-sighted recommendations outlined in the report.”

According to Chapman, implementing a uniform unit pricing methodology will address serious unit pricing errors, which are reportedly to be in excess of $750 million in the super industry over the last few years.

“Cases like MLC demonstrate that unit pricing errors can remain undetected for a number of years and have significant adverse consequences for large number of investors,” he said.

“It is widely agreed that unit pricing is the best way to ensure equity amongst members coming and going from funds.

“And as the ASIC [Australian Securities and Investments Commission] and APRA good practice guide on unit pricing states, it provides a more direct link to movement in asset values, investment income and transaction costs.”