Government finalises new super portfolio holdings disclosure rules
The government has finalised new regulations which will require super funds to disclose their portfolio holdings to members.
In a major boost to superannuation transparency, Australians will have access to information about how superannuation funds are investing their money, following the finalisation of new regulations dealing with portfolio holdings disclosure by superannuation funds.
“Under the requirements, superannuation funds must disclose information about the identity, value and weightings of their investments,” Superannuation Minister Jane Hume said.
“Members will be able to clearly see how much of their retirement savings are being invested by superannuation funds across a range of asset classes and derivatives.
“This information will make it easier for members to compare products and identify the most suitable fund for them.”
Ms Hume said that reviews of the superannuation system have found that superannuation portfolio disclosure is unduly opaque, does not meet global best practice, and that requiring the disclosure of portfolio holdings would provide greater transparency and allow members to understand where their superannuation is invested.
Under the regulations, superannuation funds will be required to first report their holdings by 31 March 2022, with portfolio holdings disclosure to occur every six months thereafter. The government will closely monitor these disclosures and consider further refinements where necessary.
“While undertaking consultation on this measure, it has become apparent that some superannuation funds have large exposures to derivatives,” Ms Hume added.
“Given Australia’s superannuation funds have now become a systemically important part of our financial system, it is timely to ensure policymakers and regulators have a sound understanding of the extent and nature of the use of derivatives and any implications for the operation of our financial system that could arise from these exposures.
“The Treasurer has, therefore, asked the Council of Financial Regulators (CFR) to prepare a report on this matter, drawing upon the information-gathering powers of the Australian Prudential Regulation Authority and the input of relevant experts from across the CFR, including the Reserve Bank of Australia.”
Peak superannuation industry body, the Association of Superannuation Funds of Australia (ASFA), applauded the news, saying it will achieve transparency for clients and recognise potential effects of investment outcomes.
ASFA chief executive Dr Martin Fahy said he is pleased the government has recognised that derivatives and the holding valuation of unlisted assets should be disclosed, which will help ensure that local funds can continue to compete on an “even footing” in global institutional investment markets.
“The regulations released today enhance transparency to consumers while recognising the importance of investment considerations around disclosure to ensure that Australian super funds continue to be able to deliver great investment returns for their members,” Dr Fahy said.
Tony Zhang is a Journalist at SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2020, Tony has covered various publications across the legal, financial and professional services sectors including Lawyers Weekly, Adviser Innovation, ifa and Accountants Daily.