PFS has made a submission in response to the Treasury’s consultation on the proposed Objective of Superannuation initiated through its Discussion Paper dated 9 March 2016.
13 November 2015
The Government has responded to the recommendations of the Financial System Inquiry generally agreeing with most recommendations. There are a number impacting the superannuation industry which we have commented on.
2 November 2015
PFS is pleased to announce that we are a founding member of APACS (Asia-Pacific Actuarial & Consulting Services) and GLOBACS (Global Actuarial & Consulting Services) formed on 2 November 2015 as two new international actuarial and consulting brands.
9 July 2015
With some fanfare, Parliament repealed more than 50,000 pages of legislation in 2014 and 2015 as part of its impressively named “war on red tape”. But, for the financial sector at least, the majority of these changes just removed obsolete provisions from the books without making any substantial improvement to the law. A bigger problem is that poorly designed legislation is still being added, and problems with active legislation are not being addressed.
Treasury has released exposure draft legislation related to superannuation governance. The proposed changes would require one third independent directors on trustee boards and would remove the equal representation and policy committee rules. These would be significant changes and trustees should consider how these changes might affect your governance arrangements.
Hundreds of Australian superannuation funds are registered as Qualifying Recognised Overseas Pension Schemes (QROPS) so that members can transfer their benefits from their UK pension funds when they migrate to Australia.
Significant changes to the UK requirements which commenced on 6 April 2015 mean that most—if not all—of these funds will no longer satisfy the QROPS requirements unless they amend their governing rules, and maybe not even then. If changes are not made, members may be hit with a 55% tax on the transfers!
Your updated policies are in place following the commencement of APRA's revised prudential regime. Now it's time to arrange for the independent review of your Risk Management Framework.
Each RSE licensee is required under APRA's Prudential Standard SPS 220 Risk Management to ensure that a review of the appropriateness, effectiveness and adequacy of its Risk Management Framework (RMF) is undertaken by operationally independent, appropriately trained an competent persons at least every three years.
PFS considers it reasonably likely that the Government, after considering submissions in response to its governance discussion paper, will make some further changes to the governance requirements of trustee boards. Better regulation and governance, enhanced transparency and improved competition in superannuation will make some further changes to the governance requirements of trustee boards. The extent and timing of any changes is unclear at present and PFS continues to monitor the Government's progress.
In the meantime, superannuation trustee boards must meet the requirements of APRA Superannuation Prudential Standard 520 Governance (SPS 510) which includes the annual assessment of board performance. This annual review must be conducted by an independent third party at least once every three years. SPS 510 was effective from 1 July 2013
A previous article, Not-so-super calculators, highlighted some of the benefits to financial advisers, and their customers, of using a stochastic simulation approach when projecting future benefits. This article examines the main hurdle that has prevented this modelling technique being adopted at a retail level and draws on our own experience in building the stochastic simulation tool used for the PFS Standard Risk Measure Model available on our website.
The projections produced by superannuation calculators, and most existing financial planning software, do not allow for, or help clients understand, investment risk. Advice based on these calculators can be distorted and place financial advisers in a difficult position when investment returns are worse than projected. PFS believes simulation based tools can be used to illustrate investment risk with significant benefits for all stakeholders.