APRA chair rejects 'extreme' super fund fears

Wayne Byres told media that the increasing number of complaints from the superannuation sector weren’t reason enough to halt legislating the Your Future Your Super (YFYS) reforms, and that funds would simply have to adjust to their new obligations.

“I take most things with a grain of salt – not dismiss them outright, but I take most things with a grain of salt. I’ve seen many policy changes that were advocated by ourselves and the government, and the response from some interest groups was that the sky would fall in – and it didn’t,” Mr Byres said.

“And the other thing which I would say that may be a bit provocative is, given the number of underperforming funds we have in the industry, a bit more index-hugging might not be a bad thing. It's not as though we’ve got large chunks of the industry massively outperforming indices.”

APRA has previously said that it doesn’t expect that super funds will have any trouble meeting the new benchmarks – which will see underperforming funds banned from taking on new members – as long as their investment strategies are “appropriately developed and effectively implemented”.

“Inevitably what happens is people will adjust. There might well be some institutions that decide to marginally shift their investment parameters, but I think it’s too early to tell. And I certainly wouldn’t say that’s a concern that leads me to think we shouldn’t proceed,” Mr Byres said.

APRA has already taken action against several funds that have fallen into the “dark red” areas of its heat map, issuing formal notices to trustees for 10 underperforming MySuper products and demanding explanation for how they intend to lift their game.