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Flexibility needed on MySuper reserves
The Federal Government has been urged not to apply a one-size-fits-all approach to apply operational reserves to super funds operating MySuper products.
Towers Watson director of superannuation Brad Jeffrey told the Conference of Major Super Funds (CMSF) on the Gold Coast that that it would be wrong to impose uniform requirements when each fund was different.
He said it needed to be remembered where the money for operation risk reserves came from — members.
“It is members’ money, therefore the reserve must be appropriate but not excessive,” Jeffrey said.
He said that in many instances the size of the reserve would not only need to reflect the size of the fund but quality of its outsourced service providers.
The general manager, supervisory support at the Australian Prudential Regulation Authority (APRA), Greg Brunner, indicated the regulator would be supporting a flexible approach.
He pointed to the different rationale APRA applied to major banks when compared to small credit unions.
As well, Brunner said APRA research indicated that around 80 per cent of industry funds already had some sort of reserving regime in place.
AUTHOR
Mike Taylor
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