Superannuation funds demand more time on risk reserves
Three years is not long enough for superannuation funds to build up the funds necessary to meet the new Operational Risk Financial Requirement contained in new draft prudential standards for superannuation released by the Australian Prudential Regulation Authority (APRA), according to the Association of Superannuation Funds of Australia (ASFA).
As well, ASFA has used its submission responding to the draft prudential standards to warn that the regulator could not have chosen a worse time to impose such a requirement on Australian superannuation funds.
"ASFA considers that three years is an insufficiently short period of time, at the best of times, to spread the cost of building up a reserve," it said.
Further, the submission said the requirement risked creating "considerable intergenerational inequity for the cohort of members who happen to be members of the fund during this period".
"It should also be noted that … the bulk of the impact of funding most of the Government's proposed $467 million SuperStream levy will fall in the next three years; and members will have to bear the fund's costs of implementing MySuper, SuperStream and the enhanced governance standards" it said.
"As such, this is just about the worst possible three-year period in history in which to ask members to bear the costs of creating an Operational Risk Financial Requirement," the submission said.
ASFA said it was therefore strongly submitting that the period over which the requirement be built up should be over the next five years, not three.
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