Actuaries Podcast – Superannuation Projection and Disclosure Subcommittee

Rein van Rooyen (Head of Investment Performance and Data at QSuper) interviews Estelle Liu (Consultant at Rice Warner) about the recent activities of one of the most active groups within the Actuaries Institute, the Superannuation Projection and Disclosure Subcommittee (SPD).

The pair discussed the constitution of SPD and the key activities that they been focusing on.

Listen to “Superannuation, Projections and Disclosure Sub-Committee

The SPD currently has 10 members and they are:

Melbourne – Colin Grenfell, Bill Buttler, Esther Conway, David Orford, Richard Starkey and Ray Stevens
Sydney – Ian Fryer and Estelle Liu (Convenor)
Brisbane – Rein van Rooyen and Brnic van Wyk
Immediate past members – Glenn Langton and Tom Sneddon

Estelle explained that the SPD has been very active in promoting actuaries working in projection and disclosure related matters, which involves recent engagement with the Treasury, APRA, ASIC and the industry on multiple topics including:

Treasury – MySuper and Choice dashboards, and the potential Retirement product dashboards
APRA – SPS 515 member outcome and stronger super review
ASIC – a number of outstanding issues including the recent CP308 which is a review of RG97 fees and costs disclosure
Industry – a long-term investment risk measure initiative and an “indirect costs” survey.

SPD has been promoting “superannuation projection as the best means to assess superannuation fund member benefit outcomes. One example is that SPD provided a submission to APRA in March 2018, specifically focusing on the Prudential Standard 225 which is on member outcome assessments. So, in this submission we highlighted the importance of using retirement benefit projections in assessing members retirement outcome.”

“The SPD has been actively engaging on the regulatory and policy front and provide more than 10 submissions, articles, and notes on average every year.” – Estelle Liu

For 2019 to date, the SPD has provided four submissions, articles and notes including:

Submission to ASIC re CP308 – review of RG97 fees and costs disclosure
Contributed to the Treasury Retirement Income Disclosure submission by the Retirement Income Working Group (RIWG)
Collaborated with the RIWG and established a working group to research and develop a rule of thumb for retirement income drawdown based on an account-based pension. The working group produced a research paper submitted and presented at the Actuaries Summit and is looking to potentially publish the paper in an academic journal.
Produced a technical paper on Historical Random Start (HRS) Modelling, the authors are working closely with Actuaries Digital to publish it soon.

Rein asked what has been the SPD’s engagement with the industry regarding a long-term investment risk measure?

“…we understand that there’s general acceptance that the current standard risk measure indicator of investment risks only focuses on the short-term investment risk and does not provide relevant risk measure to superannuation fund members, who have a longer-term investment horizon for most of the members,”said Estelle.

In order to address this problem, the SPD believes it is important to introduce a long-term investment risk measure. Both ASIC and APRA support the introduction of such a measure conditional on industry-wide acceptance of such a metric. As a result, the SPD is planning to arrange a meeting with a group of industry representatives to discuss the issue.

Regarding the engagement with the industry on the Indirect Cost Survey, Estelle explained that the survey focuses on the views of indirect costs and it was encouraged by Treasury. The SPD sent a survey to 16 actuaries working for superannuation funds and also to related financial institutions, such as ASFA, AIST, ISA, FSC, Choice and SCC regarding the calculation and disclosure of indirect costs to fund members. With assistance from ASFA it was also circulated to the CEOs of ASFA members. The survey responses were collated, analysed and shared with participants (anonymously) and with ASIC in our submission re CP308.

“so we really hope that the survey and responses will help the regulator understand the views of different industry participants regarding indirect cost disclosure matters and also with the finalisation of their subsequent policy positions.” – Estelle Liu

Listen in to the full conversation to learn more about the SPD’s other ongoing work and future areas of contributions to the actuarial profession in the area related to projection and disclosure matters.

Listen to “Superannuation, Projections and Disclosure Sub-Committee

Download the Transcript here