Super fund boards may be better served by forming investment sub-committees to deal with investment governance, according to Mercer.
Graeme Mather, Mercer head of investment consulting for Australia and New Zealand, said the SPS 530 prudential standards were an opportunity for funds to take a step back and review every step of their investment process, employing more efficient processes where appropriate.
Funds that utilised a sub-committee often proved more efficient, Mather said. He said boards should not always take on all decision-making and should delegate if it was sensible.
"It does create a lot of efficiencies in terms of being able to make progress with investment decisions and actually discuss more of the detail of a potentially new investment strategy, rather than just push it through a board where they just might not have the time to consider it," he said.
Prudential standard SPS 530 should be viewed as an opportunity rather than a compliance burden or checklist, Mather said.
"The over-arching message we want to deliver to funds is: you're going to spend a lot of time and resources trying to respond appropriately to SPS 530, so really you should be trying to get more out of it than just compliance or ticking the box to satisfy the Australian Prudential Regulation Authority (APRA)," said Mather.
Mercer senior partner Jackie Choraxy said one of the benefits of the standards were that they forced funds to focus on exactly what they need to do when making investment decisions.
APRA had been clear that funds needed to analyse member demographics, project net cash flow positions, project liquidity and be able to stress test normal and market conditions, Choraxy said.
"For many funds out there we see that as a step forward for maybe the existing processes around liquidity management, and certainly liquidity analysis," she said.
