Today, H.E.S.T. Australia Ltd (HESTA) has agreed to make payments to two cohorts of members impacted by valuation decisions made by HESTA in March 2020, at the beginning of the Covid-19 pandemic.
HESTA is the trustee for the HESTA superannuation fund, which has approximately 1.1 million members and approximately $84 billion in funds under management.
On 20 March 2020, HESTA made downwards adjustments to five single sector Choice options invested in unlisted assets but did not adjust other options with exposure to the same underlying unlisted assets (including HESTA's MySuper option) until one week later. APRA was concerned that:
- HESTA's decision-making processes for out-of-cycle revaluations of unlisted assets were not adequate for the deteriorating market conditions faced by superannuation trustees in March 2020; and
- HESTA's valuation decision in March 2020 was unfair to members who switched from an adjusted single sector options to unadjusted options within that week and members who were issued units in the unadjusted options during the relevant week. In one instance, a member who switched investments from the adjusted Choice options to the unadjusted MySuper option during the week in question was approximately $17,000 worse off.
APRA has engaged extensively with HESTA on this matter, including supervision activities to oversee strengthening of HESTA's policies and procedures around unlisted asset valuation decisions. APRA commenced a formal investigation into the issue in January 2024. In light of HESTA's decision to make payments to affected members to make them good, and improvements to HESTA's valuation policies and procedures, APRA has decided to close its investigation without further action.
