APRA and ASIC host Superannuation CEO Roundtable - September 2023

APRA and ASIC held a Superannuation CEO Roundtable on Wednesday, 27 September 2023. There were two focus areas for this discussion: sustainable finance disclosures and the Retirement Income Covenant (covenant).

Hosted by Margaret Cole, Deputy Chair, APRA, and Jane Eccleston, Senior Executive Leader, ASIC, the Roundtable was attended by 10 superannuation trustee Chief Executive Officers (CEOs) and other executives, representing a broad cross-section of the industry (see Appendix I for the full list of attendees).

Sustainable Finance Disclosures

Recent guidance issued by ASIC and subsequent disclosure related enforcement actions have highlighted the need for product issuers, such as superannuation funds, to ensure that their sustainable finance disclosures are true and accurate.
    
APRA and ASIC emphasised that the introduction of mandatory climate-related financial disclosure requirements in Australia aim to enhance transparency and boost informed decision-making by investors. Both agencies stressed the importance of preparing for this change. This involves implementing systems and processes, establishing governance practices that meet any new climate reporting requirements applying to superannuation funds, and adopting measures to prevent misleading disclosures.

The CEOs agreed that maintaining a static stance regarding disclosure and transparency requirements is no longer viable, particularly as members expect Trustees to stay true to their commitments. Additionally, the CEOs acknowledged that the management of sustainable finance issues has evolved, involving not only the investment team but increasingly also other internal teams like legal, marketing, risk, and compliance. A takeaway was the need to embed engagement with these issues across the fund.

The CEOs outlined steps they have undertaken to improve sustainable finance disclosures. This included working with independent experts, organising internal workshops to promote awareness about greenwashing risks, and using due diligence Board sub-committees to properly scrutinise disclosures made. Common challenges of funds include obtaining the right expertise internally and externally, the lack of standardised taxonomy, ensuring investment screens operate effectively, oversight of third-party providers, and ensuring accurate wording in all marketing materials.

Retirement Income Covenant

With approximately six million Australians at or above the superannuation preservation age and an additional three million becoming eligible to withdraw from their super in the next decade, there is an urgent need to enhance the outcomes for individuals approaching or in retirement.

APRA and ASIC have engaged with the industry on retirement practices in a previous Roundtable and have since released the joint APRA ASIC thematic review report (report) into the implementation of the covenant. In the next few months, APRA will issue a short survey to all Trustees to understand what improvements have been or will soon be undertaken across the key priority areas identified by the report to check Trustees are acting with sufficient urgency in improving retirement outcomes.

During the Roundtable the CEOs discussed their responses to areas of improvement outlined in the report. They shared ideas on achieving quick wins in delivering cost-effective retirement income solutions, such as leveraging external service providers and technology. The CEOs stressed the importance of using data to understand their members’ needs and build their confidence in the retirement phase, highlighting the need for adopting strong data security practices if collecting personal data. A positive development noted was an increasing understanding and focus on retirement across funds, rather than retirement being seen as a niche area. Although progress has been made, the CEOs collectively recognised that significant efforts are still required to develop retirement offerings for members that will truly meet their needs.

Appendix I – CEO Roundtable attendees

Superannuation Executives    

APRA attendees    

ASIC attendees    

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