The Australian Prudential Regulation Authority (APRA) has enhanced a core prudential standard governing strategic planning and member outcomes in superannuation.
The updated Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) and related guidance reinforce trustees' duty to act in the best financial interests of members. The changes ensure members' interests are front-and-centre in trustees' strategic and business planning, financial resource management, implementation of the retirement income covenant and fund transfers.
The revised standard and guidance also set clear expectations for trustees on expenditure. The guidance sets out:
- design principles for a robust expenditure management framework - including board oversight, alignment to strategic objectives, and active monitoring and review;
- APRA's view that better practice is for trustees to obtain a yearly attestation from accountable senior executive management that they are taking reasonable steps to meet the requirements in SPS 515 regarding expenditure management; and
- APRA's view that such attestation should confirm that controls are in place and operating effectively to prevent expenditure that would be unjustifiable in the context of the duty to act in the best financial interests of beneficiaries.
Deputy Chair Margaret Cole said: "By strengthening this core strategic planning standard, APRA is setting a clear expectation for trustees to put members front of mind in every decision they make and the way they run their businesses every day.
"Fund expenditure is a significant area of focus for APRA and the broader community. In addition to tightening the obligations under SPS 515, APRA is now collecting, analysing and will be publishing detailed expenditure data at a fund level. APRA will review the data to ensure spending aligns with the best financial interests of members, and will follow up trustees with outlying discretionary expenditure.
"The industry will face further scrutiny on spending when the Financial Accountability Regime comes into effect for superannuation next March, with trustees required to identify an accountable person with responsibility for expenditure.
"Another important change to SPS 515 is the requirement to support the implementation of the retirement income covenant. It's estimated that more than three million fund members will reach superannuation preservation age in the next decade making it critical that funds have robust and effective strategies to assist members who are approaching or in retirement," Ms Cole said.
Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) will take effect from 1 July 2025.
A copy of the consultation response paper and links to the updated standard and guidance are available on the APRA website at: Strategic planning and member outcomes: proposed enhancements.
