APRA has released for consultation proposed revisions to Prudential Standard SPS 530 (Investment Governance)which aims to ensure registrable superannuation entity (RSE) licensees prudently select, manage and monitor investments. The proposed revisions to SPS 530 respond to findings from APRA’s unlisted asset valuation thematic review and its 2018-2019 post-implementation review of the super prudential framework. The updates focus on enhancements to stress testing, valuation and liquidity management practices.
This investment governance framework must include the investment strategies for the whole of each RSE, and for each investment option, as required by the Superannuation Industry (Supervision) Act 1993.
The key requirements of this Prudential Standard are that an RSE licensee must:
- formulate specific and measurable investment objectives for each investment option, including return and risk objectives;
- develop and implement an effective due diligence process for the selection of investments;
- determine appropriate measures to monitor the performance of investments on an ongoing basis;
- review the investment objectives and investment strategies on a periodic basis;
- develop and maintain a comprehensive investment stress testing program;
- formulate a liquidity management plan; and
- develop and implement an effective valuation governance framework.
DATE OF EFFECT: The enhancements to SPS 530 are expected to commence on 1 January 2023.
COMMENTS are due by 16 February 2022. [LTN 188, 29/9/21]
[Tax Month – September 2021] 3.10.21