The new Superannuation Investment Risk Reporting Requirements come into effect from 22 June 2012 – the date when the shorter PDS requirements come into force.  All superannuation product disclosure statements will need to contain the “standard risk measure” (SRM) for each investment option provided by the fund.  This measure of risk is expressed as the number of years that a negative return is expected to occur in any 20 year period.

A statistical analysis of the investment characteristics of different asset classes is required to develop appropriate assumptions.   PFS has derived a set of assumptions relating to the characteristics of various asset classes, and the correlations between these, based on decades of data.

PFS, with its IT partners Foresight Systems and Cordelta, has used its core actuarial expertise to develop a simulation model that underlies our web-based SRM service.  This service:

• produces a report which meets the requirements set out in the SRM Guidance Paper;
• provides an independent assessment of the modelling results you may receive from your asset consultant;
• enables you to demonstrate a robust process to APRA; and
• is available for your use 24 / 7.

We are pleased to offer the PFS Standard Risk Measure service on our website – click here.

A number of Trustees have asked if PFS can provide the SRM service based on their Fund’s own specific investment characteristics.  We are pleased to work with Trustees and their asset consultants to provide this customised service.

Please contact your PFS consultant, or one of the authors for more information.

Martin Fitzpatrick and John Newman
November 2011

For more information, contact:

Martin Fitzpatrick

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02 9225 6108

John Newman

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02 9225 6109