E8. Are Quality of investment This indicator is already covered by legislation and standards. principal−agent committee and investment APRA has determined that super funds must establish an problems being governance processes, investment governance framework (Prudential Standard SPS minimised? including use of performance 530). An investment governance framework is defined as the attribution analysis and risk totality of systems, structures, policies, processes and people to management (input) address the RSE licensee’s responsibilities with regard to investments of each RSE within the RSE licensee’s business operations. This includes generating returns to meet investment objectives while managing and monitoring all identified sources of investment risk. An indicator that focuses on “level of skills and standard of performance” is likely to be subjective and is not consistent with APRA’s Investment Governance standard. In relying on research by others, AIST expects that the Commission will have regard to research/reviews supporting the quality of investment processes in profit-to-member funds in Australia and internationally. Note that the relative performance of P2M funds in Australia in generating strong net returns to members demonstrates the effectiveness of their investment governance processes.
E8. Are principal−agent problems being minimised? Quality of investment committee and investment governance processes, including use of performance attribution analysis and risk management (input) This indicator is already covered by legislation and standards. APRA has determined that super funds must establish an investment governance framework (Prudential Standard SPS 530). An investment governance framework is defined as the totality of systems, structures, policies, processes and people to address the RSE licensee’s responsibilities with regard to investments of each RSE within the RSE licensee’s business operations. This includes generating returns to meet investment objectives while managing and monitoring all identified sources of investment risk. An indicator that focuses on “level of skills and standard of performance” is likely to be subjective and is not consistent with APRA’s Investment Governance standard. In relying on research by others, AIST expects that the Commission will have regard to research/reviews supporting the quality of investment processes in profit-to-member funds in Australia and internationally. Note that the relative performance of P2M funds in Australia in generating strong net returns to members demonstrates the effectiveness of their investment governance processes.
sub039-superannuation-assessment.docx