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| Michele Dolin |
GESB has announced its support of the Cooper Review’s recommendation that superannuation trustees and administrators retain greater levels of capital to buffer risk.
Funds should be able to hold operational risk reserves and remain low-cost providers with competitive fees, but prudent governance around the operation of the reserves is critically important, according to GESB chief executive Michele Dolin.
“A fund should specify the purpose of its reserve and also develop a reserving policy that includes minimum and maximum levels,” Dolin said.
“Far from disadvantaging members, an operational reserve protects them in instances of fraud, pricing error or system failure.”
Senior partner at Mercer David Knox said that Mercer had worked with a range of clients to set up these reserves over the past few years.
“[The Australian Prudential Regulation Authority] has confirmed that all members stand to benefit from an operational risk reserve, even if incidents do not eventuate while they are part of the fund,” Knox said.
“GESB is proof that you can price for a contribution to a risk reserve, yet still remain low-cost and attractive to members.”
GESB has had a reserving mechanism in place for some time and was still ranked in the top 15 per cent best ‘value for money’ funds by SuperRatings, Dolin said.
