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Article | Super Update

Super Update: Proposed APRA changes to superannuation fund operational risk financial management

January 31, 2023

A replacement for prudential standard SPS 114 would mean enhanced and materially different obligations for trustees around maintaining financial resources for risk events in superannuation.

APRA has opened consultation on new obligations to replace prudential standard SPS 114 Operational Risk Financial Requirement (ORFR).

Our January Super Update unpacks APRA’s discussion paper outlining the proposed changes. At the core of these enhanced requirements will be a two-tiered model which APRA calls Baseline+, consisting of:

  • a baseline component, to ensure ready access to financial resources to fund recovery or exit activity and
  • an operational risk component, to spread the impact of operational risk fairly across different cohorts of members. The operational risk component will largely reflect the approach of the existing ORFR but with greater flexibility.

Consultation closes on March 17, 2023.

This issue also includes details of ASIC’s review of super fund trustee complaints handling, while our news in brief looks at Government consultation on climate related financial disclosure, new versions of prudential standard SPS 310 and CPS 190, a new draft SPG 530 Investment governance released for consultation, the 2022 APRA MySuper Heatmap and the latest superannuation statistical publications.

As usual, we provide a legislative update and our handy guide to key changes and their effective dates.

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