Topic Paper 3 - Member Accounts

About this paper   

This paper provides detail on the draft "Superannuation Reporting Standard (SRS) 611.0 Member Accounts" (SRS 611.0). 

Data required in draft SRS 611.0 will support the assessment of:

• outcomes to members across different member cohorts;
• superannuation fund sustainability; and
• fund strategy, including the impact of legislative changes. 

The ability for APRA to make this assessment will support focusing its supervisory intensity on areas of the industry that are underperforming or where improvements in practices are needed.

As described in the "Superannuation Data Transformation Phase 1 Discussion Paper" (The Discussion Paper)released on 7 November 2019, proposals for each topic will be released for consultation separately in targeted ‘Topic Papers’ with a series of questions on specific areas on which APRA seeks feedback. 

This paper provides details of the proposed changes to reporting requirements regarding Member Accounts including:

• objectives of the proposed changes;
• the current state;
• drivers for change;
• the proposed state; and
• specific areas of the proposals that APRA is requesting feedback on.

The proposals in this Topic Paper should be read in conjunction with the Discussion Paper and the draft reporting standard SRS 611.0.

A summary of the key changes proposed to reporting on Member Accounts is provided in Appendix 1.

Formal written submissions for Topic Paper 3 close on 26 March 2020. APRA will also be engaging with industry participants via roundtable discussions and undertaking a pilot collection of the data set out in draft SRS 611.0. These processes will assist APRA to refine and finalise draft SRS 611.0, taking into account industry feedback and insights from the pilot data collection process.

Chapter 1. Introduction

1.1 Background

Over the last decade, the superannuation industry has grown in size and importance in the Australian economy, with total assets of superannuation entities increasing from $1.1 trillion to $2.9 trillion. The evolution of the superannuation system has been accompanied by continued consolidation of Registered Superannuation Entity (RSE) licensees and RSEs, with large and more complex entities managing the retirement benefits of most Australians. In this context it is critical that regulators and other stakeholders have access to data that appropriately reflects the size, nature and complexity of the industry.

A significant volume of data on the superannuation industry is already available, but there are important gaps in coverage and quality that need to be addressed. Addressing these gaps will enable deeper insights into the effectiveness of RSE licensee operations and enable a better understanding of outcomes delivered to their members. 

A key focus for Phase 1 of the Superannuation Data Transformation is to address coverage issues with the scope of data collected under current reporting standards. Addressing these issues will support the industry to implement the requirements in "SPS 515 Strategic Planning and Member Outcomes"(SPS 515) and support APRA’s work to improve transparency on RSE licensees and RSE performance. In particular, Phase 1 of the Superannuation Data Transformation will facilitate performance assessments for choice products and more granular comparisons of performance across products and investment options.

1.2 Drivers for change

The key drivers for change of the Superannuation Data Transformation program are outlined in the Discussion Paper released on 7 November 2019.

For this topic paper on Member Accounts, the drivers for change stem from the current data collection having insufficient granularity of data on membership composition, including account activity status, age and benefit information. Increased granularity of data is necessary to support the assessment of fund sustainability, outcomes for key member cohorts and the impact of factors, such as legislative change, on the delivery of the RSE licensee’s strategy.

Collecting more granular and more frequent data is necessary for APRA to be able to identify and focus supervisory attention on RSEs and MySuper products that may have emerging challenges from deteriorating sustainability.

1.3 Objectives of the proposed changes

Through the changes proposed in this paper, APRA is seeking to:

• support the assessment of fund sustainability and strategy, including the impact of legislative changes; and
• enable deeper insights on fund membership and outcomes for members through additional granularity on member demographic information collected at the RSE and MySuper product level.

Chapter 2. Member Accounts 

Through SRS 611.0, APRA is proposing to enhance the existing collection of member segmentation data at the RSE level and MySuper product level. Currently, entities report to APRA the number of member accounts and the sum of member balances segmented by age, gender and members’ benefit bracket. SRS 611.0 sets out additional granularity to the current segmentation for age and members’ benefit bracket as well as the addition of segmentation by three new account activity characteristics. APRA is also proposing to increase the frequency of reporting for this member account segmentation from annually to quarterly.

Appendix 1 contains a summary table of proposed changes against existing reporting.

In Phase 2 of the Superannuation Data Transformation program of work (due to commence later in 2020) APRA will consider the collection of data on a member level basis. The proposals under SRS 611.0 bridge a gap between the existing data collected on Member Accounts and future implementation of a detailed member level data collection.

APRA considered the availability of data under the existing reporting service, Member Account Attribute Service (MAAS) and Member Account Transaction Service (MATS), provided through the Australian Tax Office (ATO) in developing these proposals. APRA has found that MAAS and MATS reporting does not have data fields that are essential to meet the required objectives for member segmentation data.  Specifically, MAAS and MATS reporting does not generally capture member account balance (item 4 in SRS 611.0) beyond a 30 June annual figure, nor is sex (item 3 in SRS 611.0) data collected directly or member activity characteristics (items 5, 6 and 7 in SRS 611.0).

APRA will continue to work with the ATO and industry to consider options for implementing member-level reporting in future.

2.1 Member age

Existing requirements

Under APRA’s existing superannuation data collection, member ages are reported via twelve defined age brackets.

Proposed changes

Under SRS 611.0, reporting for all members will be in accordance with their age in years as at the reporting date. Collecting data by year of age will improve the richness of membership data that is available for analysis of industry trends by APRA and other stakeholders, and facilitate a better understanding of member cohorts of importance to RSEs. 

2.2 Gender

Existing requirements

The existing superannuation data collection was aligned with guidelines released by the Attorney-General’s Department in 2013 on recognition of sex and gender (reported using four dropdown boxes).

Proposed changes

Under SRS 611.0, reporting in this area will be aligned to standards maintained by the Australian Institute of Health and Welfare (using four options). The category ‘Gender’ will be updated to ‘Sex’ for future collections as this is relevant for insurance and life expectancy. The gender segmentation of ‘intersex or indeterminate’ will be updated to ‘other’ in SRS 611.0.

2.3 Members’ benefit brackets

Existing requirements

Under the existing superannuation data collection, member data is reported for eight members’ benefit brackets.

Proposed changes

Under SRS 611.0, APRA is proposing to collect additional categories for member balances to provide additional granularity in respect of lower benefit balances, where the impact of fees, costs and insurance is more significant. The proposals increase the number of brackets from eight to twelve.  Please see draft SRS 611.0 for details of the new benefit brackets.

Additional granularity on member balances will support the assessment of fund sustainability and strategy, including the impact of legislative changes relating to default insurance, fee caps and sweeps of inactive accounts to the ATO.

2.4 Member activity

Existing requirements

Inactive members

Under the existing superannuation data collection, the total number of inactive member accounts and the total benefits in these accounts are reported via "SRS 610.0 Membership Profile" (SRS 610.0). No further breakdown of these inactive accounts by age, balance or gender is reported. 

Under SRS 610.0, an inactive account represents a member account that has not received any contributions, rollovers or transfers, or made any benefit payments within the last two years and which has not been closed as the member is not contactable.

Proposed changes

APRA is proposing that the existing items will continue to be reported under SRS 610.0. Through SRS 611.0, APRA is proposing to collect new data on member activity characteristics by age, gender, member benefit bracket and inactivity status.

To understand the activity status of RSEs’ membership base, and to provide an indicator of member engagement and future sustainability, APRA is proposing to collect data on the following member characteristics:

• Sixteen month inactivity: members for whom the RSE has not received an amount for crediting to the fund within the last 16 months;
• Insurance benefit election: where the member holding the account has elected to receive insurance benefits under subsections 68AAA(2), 68AAB(2) or 68AAC(2) of the SIS Act; and
• Recent member interaction: any of the events listed in paragraph 20QA(1A)(b) of the  "Superannuation (Unclaimed Money and Lost Members) Act 1999"  have occurred in relation to the member holding the account in the 16 months preceding the reporting date.

Chapter 3. Overlap with existing reporting standards

There is overlap between data to be collected through the proposed SRS 611.0 and member account segmentation data that is provided under current reporting standards:

• "SRS 610.0 Membership Profile" (table 5), and;
• "SRS 610.2 Membership Profile" (table 5).

APRA will consider granting exemptions from reporting these data items under existing reporting standards or, where relevant, discontinuing collection under an existing reporting standard, to the extent that new reporting standards duplicate data that is already collected.

Chapter 4. Proposed non-confidentiality determination

APRA’s Superannuation Data Transformation will lead to significant changes to reporting requirements.  As a result of these changes, APRA is considering whether the data reported under the "Financial Sector (Collection of Data) Act 2001" (FSCODA) should be determined to be non-confidential and publically accessible.

APRA is generally able to publish aggregate industry-level data without restriction. To achieve the objectives of the enhanced superannuation data collection, which includes improved accountability of the industry and more informed analysis and assessment of the performance of the superannuation industry by stakeholders, it will be necessary to publish data at an individual entity, product and investment option level.

Under section 56 of the "Australian Prudential Regulation Authority Act 1998" (APRA Act), data reported to APRA under FSCODA is protected information and generally cannot be disclosed at an entity level, unless APRA determines the data to be non-confidential.

However, section 57 of the APRA Act permits APRA to make a determination that data provided in a particular reporting document, which has been submitted in accordance with a reporting standard made under FSCODA, is non-confidential. APRA may make such a determination if it considers the benefit to the public from the disclosure outweighs any detriment to commercial interests that the disclosure may cause.  

FSCODA also requires that APRA must not make such a determination unless it has:

• given interested parties (bodies or associations representing the relevant kind of financial sector entity) a reasonable opportunity to make representations as to whether information of the kind that is proposed to be released is confidential; and
• taken any such representations into account.

APRA proposes to determine under section 57 of the APRA Act that all data collected under SRS 611.0 is non-confidential.

Reasons for the proposed determination

The data to be collected under SRS 611.0 will provide essential material to fulfil the objectives of the Superannuation Data Transformation. Publically releasing SRS 611.0 data at an entity level will provide necessary information on RSE membership to allow APRA, other regulators and industry stakeholders to understand and assess the impacts of regulatory reforms.

Privacy of individual members

Data which APRA determines to be non-confidential will enable the publication of individual entity data, however, measures will be taken to protect the privacy of individual members. This is consistent with the approach under APRA’s current suite of publications.

APRA intends to release proposals with regards to publication and sharing of data for the proposed data collection in the first half of 2020.

4.1 Feedback sought on confidentiality proposals

As required under subsection 57(3) of the APRA Act, APRA seeks submissions from RSE licensees and other interested parties on whether data to be collected under SRS 611.0 should remain confidential. The submissions should include:

• details of the data items that should remain confidential (if any);
• information on how the disclosure of that information would lead to detriment to member interests, and the extent to which that could occur; and/or
• information on how the disclosure of that information might lead to detriment to RSE licensees or other parties’ commercial interests.

Chapter 5. Consultation questions: Member Accounts

Comment is invited on the content of this paper, specifically in the below areas:

1. Would there be significantly different implementation costs associated with implementing member-level reporting compared with the data outlined in SRS 611.0?
2. Will the total number of member accounts reported under SRS 611.0 significantly differ from the number of member accounts reported under SRS 610.0 due to the definitions used for the activity characteristics in items 5, 6 and 7 of SRS 611.0?
3. APRA seeks feedback on the estimated cost implications from an implementation perspective of the increased frequency of submissions of Member Accounts data required in SRS 611.0 from annual to quarterly, as well as the increased granularity of reporting. 
4. Feedback as outlined in item "4.1 Feedback sought on confidentiality proposals".

5.1 Submission of responses

Written submissions on this Topic Paper should be sent by 26 March 2020, preferably by email to superdatatransformation@apra.gov.au. Alternatively, submissions can be mailed to:

General Manager 

Data Analytics & Insights

Risk and Data Analytics Division 

Australian Prudential Regulation Authority

GPO Box 9836

SYDNEY NSW 2001

5.2 Submission of pilot data

Through Phase 1 of the Superannuation Data Transformation, APRA is seeking to collect pilot data to test and inform areas for clarification prior to finalising Phase 1 reporting standards.  As the pilot data is based on draft reporting standards, this data is not collected under the auspices of FSCODA and will be on a best endeavours basis. 

Each Topic Paper will be accompanied by draft reporting standards, a reporting template to collect pilot data, specified reporting periods for RSE licensees to provide data in the template and due dates for submission.

Following the collection of the Phase 1 pilot data, an updated data template will be provided to entities for completion to further test and clarify the draft reporting standards.

APRA intends to publish the pilot data received, after the Phase 1 Reporting Standards have been finalised. It is intended that the published data will assist RSE licensees in meeting their obligations under SPS 515. It will also inform Phases 2 and 3 of the Superannuation Data Transformation.

This table summarises the key features of the initial pilot data collection for this topic paper: 

Appendix 1 – Key changes proposed to membership reporting