ROUNDTABLE
Do heatmaps work
when one size does not fit all? The Australian Prudential Regulation Authority may not have taken enough account of the different member demographics and the different investment objectives of superannuation funds in developing its heatmaps, according to a roundtable of senior superannuation executives.
A ATTENDING: Russell Mason Superannuation partner, Deloitte Paul Schroder Chief risk officer, AustralianSuper Ben Facer Chief operating officer, NGS Super Alex Hutchison CEO, EISS Super Andrew Proebstl CEO, LegalSuper Paul Cahill CEO, NESS Super Andrew Boal CEO, Rice Warner Jeff Fernandes ANZ country head, Tech Mahindra Chair: Mike Taylor, managing editor, Super Review
As the superannuation industry has moved in 2020, executives and trustees have continued to express concern about how the Australian Prudential Regulation Authority’s (APRA’s) inaugural heatmap exercise may have misrepresented the performance of some funds. A roundtable conducted by Super Review during the Association of Superannuation Funds of Australia national conference in Melbourne and ahead of APRA’s release of the heatmaps revealed that some of the industry’s most senior executives had legitimate concerns about the regulator’s approach, not least whether APRA could or would recognise that one size does not fit all. The broad concerns of the executives of the roundtable, sponsored by Tech Mahindra, were reflected by NESS chief executive, Paul Cahill, who said there needed to be a clear understanding of what constituted performance for superannuation funds. “Performance from an investment perspective is one thing, but what about insurance, what about
governance and other matters,” he said. However, he said that the importance of investment performance should not be under-estimated. “If you can generate good performance, people will follow,” Cahill said. “Good performance will drive a lot of members through the door.” NGS Super chief operating officer, Ben Facer, agreed with Cahill but said that while investment performance was obviously a key fact, it was not the ultimate determinant. “Obviously it [investment performance] should have very heavy weight because it is a key driver of outcomes but we should not be looking at just absolute performance,” he said. “Funds are different with respect to profiles and objectives. If there are two funds with two separate sets of objectives you would expect them to perform differently.” EISS Super chief executive, Alex Hutchison, said he believed any assessment of superannuation funds should not ignore the concept of “social license”.
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