The seeds of APRA’s Superannuation Data Transformation (SDT) project have been sown, and while the industry continues to work hard developing its fields of data (pun intended), we pause to reflect on this challenging, multi-year project and what it will harvest.

Just as our resilient Aussie farmers perform through increasingly complex and accumulating economic, social, environmental and institutional shocks and stresses … so do our super funds. However, we are aiming for more data to prove it!

IQ Group continues to support clients in meeting SDT requirements and navigating one of the most challenging projects that the industry has faced in its history. The project, aimed at driving continuous improvement, addressing underperformance within the industry and ultimately delivering quality outcomes for members, is a third of its way through.

Phase 1 – Complete
The bulk of Phase 1 (which covered the highest priority data issues around choice products and investment options along with expense reporting, insurance arrangements, member demographics and asset allocation classifications) was implemented in September last year.

Phase 2 – In progress
Currently being implemented, the second phase of the project explores new and better approaches to data reporting, across all areas including governance and risk management. The granularity of data collections will increase in order to understand the needs of stakeholders. Also, any issues around duplication, or redundancy of data, will be addressed.

Phase 3 – March 2023
The last phase of the project will review and address any issues with quality and consistency, or unintended consequences of the reporting framework already implemented.

Like other significant projects, the SDT requires a lot of hard work and here’s some of the challenges that the industry is facing:

• Little capacity to engage with consultations, particularly over the August to September 2022 period due to a number of regulatory changes (such as the expanded performance test).

• Collecting data from insurers is not directly accessible by funds. Also, the interpretation of insurer details can vary with differences in the default employer data received from insurers.

• Collecting data from custodians, such as Asset Allocation, is also not always available or may not go to the detailed level expected. Also, custodians are reliant on fund managers for such information.

• Some data is viewed as ‘confidential’ by funds. For example, expenses incurred in operating the fund.

• Collecting required data from legacy systems can be difficult as it usually requires the co-operation of other entities.

• Multiple databases storing data may need to be amalgamated with registry system data and then converted into the required format.

• Increased pressure to improve practices, keep a low fee base as well as providing adequate returns on member investments – given the scrutiny on improving outcomes for members.

“The data being demanded by regulators is extensive and is only going to grow. APRA is starting to know more about Funds, Trustees, and the products they manage than they do about themselves. If the Trustee/Fund hasn’t already, they need to consider this data as core business, they need to get very good at sourcing, managing, reporting, and analysing data to enable informed decisions for their business and members”.

– Peter McDonald (Principal Consultant – IQ Group)

The SDT initiative is demanding (particularly for an industry that is undergoing increasing mergers and significant change) however, it’s critical for the Regulator, along with all industry stakeholders, to effectively assess the performance of an industry that holds over $3 trillion in member assets and increasing importance in the Australian economy.

With such a large scope, extending to all products and across a wide range of reporting areas, it will be a while yet before members will reap what the industry sows and the project proves it has successfully increased the scrutiny, analysis and accountability of super. However, APRA intends to use the data in MySuper and Choice heatmaps, super fund performance assessments, the YourSuper comparison tool, publications, and prudential supervision and this goes a long way to creating a transparent industry that acts in the best interests of members and also helps government make informed decisions when it comes to changes to super.

With all this considered, perhaps we shouldn’t judge the harvest (from this particular project) by what it reaps, but rather by the seeds that it plants?

By Jocelyn Adolphe, IQ Senior Consultant

IQ Group is always on the lookout for what might change in the future. For the most part, superannuation was not a major talking point during the election. That all changed with the Liberal announcement of their Super Home Buyer Scheme.  As the final results are still coming in, we pause to consider the ‘super horizon’ under a Labor Government.

Already on the road (for 1 July)

The following measures, legislated under the previous government, are not going to be changed by Labor:

• SG increase to 10.5% (with continual increases to 12% in 2025);
• scrapping of the $450 per month wage threshold;
• downsizer contribution minimum age drop from 65 to 60, as a measure to increase housing stock for families (Labor will also legislate to drop this further to age 55 in line with election promises); and
• removal of the work test for those aged 67 to 74 years (inclusive).

Labor election promises to be implemented:

• extend eligibility for the senior card (matched Coalition promise);
• freeze pension deeming rates (matched Coalition promise); and
• review benchmarking tests of the Your Future Your Super performance assessment.

On the horizon

The Labor government may also consider:

• super for paid parental leave (not likely for a while yet as Labor currently cites budgetary repair concerns as a reason);
• improved access and fairness of the superannuation structure for women; and
• various protections around eligibility, unpaid superannuation benefits and contractual arrangements (that perhaps fall more into the industrial relations bucket but have an impact on the super industry).

Ruled out

• Liberal’s announcement of a Super Home Buyer Scheme allowing first home buyers to invest up to 40% of their super (up to a maximum of $50,000) – criticised by Labor during the election. Labor had an alternate policy to promote home ownership that did not involve superannuation.

We are yet to see how the independents and other parties will influence (or not influence) the superannuation landscape under a Labor Government. However, given super has not been a significant focus during the election, its horizon looks relatively unchanged.

The industry will continue to undergo significant mergers and acquisitions and be challenged to implement the many legislative changes post the Royal Commission. However, it may just be able to take a pause, and be given a little more time to focus on consolidation of existing processes, remediation and operational efficiency rather than continued legislative change.

IQ Group look forward to continuing to support and advise our many superannuation clients on the journey ahead and making sure that the super horizon is a bright one .. for the industry and, most importantly, the millions of members that it serves.

By David Atcheson, IQ Consultant