Speaking at the Conference of Major Superannuation Funds on the Gold Coast on Friday, APRA deputy chair Helen Rowell said there is "considerable reluctance" by super fund boards to acknowledge it is in members' best interests to pursue a merger or a wind-up of their fund.
Ms Rowell said some super fund boards set up their business plans and assess their performance against targets that allow them "too readily" to rule out a merger or wind-up.
By setting up their plans and performance targets in such a way, boards can conclude 'things will improve if we do this' – even when past performance suggests otherwise, she said.
"We acknowledge that it can be difficult to reach the decision to exit, and that there may be some challenges associated with finding a like-minded merger partner," Ms Rowell said.
"But that does not mean that these important decisions should be avoided, or that (perhaps somewhat short-term, self-interested) reasons [should be] found to avoid proceeding with fund mergers that otherwise appear to be in members’ best interests."
APRA is primarily concerned that the Australian superannuation market remains "fit for purpose", Ms Rowell said.
"That means having the scale, capacity and resources to deliver on their obligations to members on an ongoing basis – which requires sound planning taking into account a range of plausible scenarios; disciplined monitoring of progress against those plans; and taking prompt corrective action when underperformance is identified," she said.
"Not all trustees are doing this adequately. Key improvements in practices that we would like to see include: setting more realistic plans and targets, reflecting past progress relative to plans; considering a range of plausible scenarios in planning, not just a ‘best case’; adopting more robust assessment and monitoring of progress using a wider range of measures; and taking more decisive and timely corrective action when needed."
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