The Australian Prudential Regulation Authority (APRA) needs to think beyond this week’s cut-off date for Registrable Superannuation Entity (RSE) licences and make workable arrangements for those funds which cannot make the deadline, according to superannuation leader at PriceWaterhouseCoopers, David Coogan
Coogan told Super Review that what needed to be recognised about the RSE Licensing process was that the 1,200 funds which existed as at June last year looked like being reduced to just 320 and that the process of winding up those funds represented a considerable burden.
“We know that a couple of hundred have completed the winding up process but that leaves about 800 who are still to do so and we know that there are around 300 funds that simply won’t get there in time,” he said.
Coogan said that what had to be remembered by APRA and Treasury was that there would be consequences for the members of those funds in terms of being forced to contribute to other funds and incurring another administration fee and in terms of the cost of winding up their old fund.
“That’s why we think that provision should be made for those funds which are winding up consistent with APRA’s requirements to continue to accept contributions until that process is complete,” he said.
“It is fair enough for APRA to appoint administrators to those funds which are failing in their obligations with respect to winding up but for those funds which are doing the right thing it seems to us they should be allowed to continue accepting contributions,” Coogan said.
He said the simple bottom line was that as things currently stood the industry could not handle the volume of transitions that were occurring as a result of the wind-up process.
“It needs to be remembered that, in normal circumstances, it is a process that can take from 12 to 18 months,” Coogan said.
