Superannuation funds should not be compelled to handle rollovers within three working days but, rather, should do so as quickly as practicable and take no longer than 30 days, according to the Association of Superannuation Funds of Australia (ASFA).
Responding to the Australian Prudential Regulation Authority's (APRA's) draft prudential standards for superannuation funds, ASFA said the three working day rule for rollovers appeared to be focused on receiving information "and not with the accuracy of the information, or any concerns around the identity of the person making the request".
"That is, the rules operate on the presumption that, having passed the Australian Taxation Office's (ATO's) identification validation process, the assumption is that the person who is making the request is the person who owns the benefit. That is, there is no risk of fraud," the submission said.
It said that ASFA was also concerned that the three day rule "primarily targets members in existing default options and, going forward, in MySuper products because other regulations treated investments in a choice option as an "illiquid investment and subject to an ‘as soon as is practicable but in no more than 30 days' rollover requirement".
The submission said the three working day rule for rollovers:
*Does not recognise existing and long-standing arrangements for forward unit pricing;
*Will drive the industry towards the costly introduction of daily unit pricing process and further entrench short-termism in investment decisions (which is counter to the notion of superannuation being a long-term savings vehicle); and
*Will limit the scope of investment arrangements that trustees will be able to consider for MySuper products, to the detriment of members invested through those products.
