ASIC and APRA have asked superannuation trustees to boost efforts to track and measure the impact of their strategies to improve retirement outcomes for members.
In a joint statement issued on Tuesday, the corporate regulator and the prudential supervisor revealed that a recent pulse check had found that “some significant gaps” still remain a year after the regulators first identified a lack of urgency among trustees in embracing the intent of the Retirement Income Covenant (RIC).
As part of a follow-up survey, the regulators collated almost 50 responses to the recommendations and findings from the thematic review, which found only incremental progress had been made to measure and track retirement income strategies.
The regulators also found that just eight trustees said tracking the effectiveness of retirement-focused assistance to members was a priority, while only one in five planned improvements identified by trustees to better understand members’ needs were expected to be completed by mid-2024.
“The most concerning finding from this survey is the lack of progress being made by trustees in tracking the success of their strategies, especially as this was highlighted as one of the key areas in need of improvement in the thematic review report,” said APRA deputy chair Margaret Cole.
“Without effective success metrics, how can trustees know that their strategies are working? Members deserve better.”
ASIC commissioner Simone Constant observed trustees have a “pivotal” role to play in improving the retirement outcomes for their members, with some 6 million Australians at or above superannuation preservation age in June 2023, and a further 3 million becoming eligible to draw from their super in the next 10 years.
“Pleasingly, trustee responses to the survey indicate they are pushing ahead with work to refine their strategy implementation,” Constant said.
“However, we expect trustees to assess gaps and identify opportunities to accelerate progress in closing these gaps, including by leveraging examples of progress outlined in this industry update.”
Since the thematic review in 2023, a number of trustees cited better practices on the RIC, including providing retirement-specific information to members through targeted cohort communications, email nudge programs, and pre-retirement guidebooks and checklists; and establishing retirement-focused leadership roles and teams.
However, they also pointed to a number of challenges in implementing the covenant. These include the ability to meet members’ retirement advice needs, given the uncertainty around the financial advice framework; a general lack of member engagement and financial literacy regarding their superannuation and retirement phases; and privacy, security, and cost concerns on collecting more member data.
APRA and ASIC flagged that “continued focus on the retirement phase is critical”, given the number of members moving into the retirement phase in future years and the growth of account balances transitioning into retirement.
