The Australian Prudential Regulation Authority (APRA) has signalled its intention to move to mop up one of the unintended consequences of corporate superannuation outsourcing.
The regulator has used its annual report to point to the increasing number of sub-funds within superannuation funds which it says do not necessarily fall squarely under the Superannuation Industry (Supervision) Act which it says treats the master trust as a single entity but contains a number of provisions with reference to sub-funds.
“APRA considers that the presence of sub-funds exposes superannuation funds to additional risks, which trustees must identify and address,” it said. “This is particularly the case for sub-funds covering defined benefit schemes, which at a given point of time may not be fully funded.”
The report said that APRA’s supervisory approach now involved closer scrutiny of sub-fund activity to minimise the exposure of fund members to potential problems.
