Australia: Second set of draft prudential practice guides released for superannuation

Timing and frequency of actuarial review when defined benefit pensions are being paid.

Evidencing the strength of the financial position of the fund.

Reporting by the actuary.

Actions that can be taken to address an unsatisfactory financial position.

Factors that can be considered in developing a restoration plan and when setting the duration of the restoration plan.

Arrangements that APRA might approve to fund current and future self-insurance liabilities.

APRA's actuarial oversight expectations.

APRA's views on the different purposes for which a reserve may be established and maintained, including administrative and operational risk purposes.

Measures that APRA regards as sound practice in a strategy for the management of a reserve including, among other measures, a clear definition of the purpose of the reserve, a determination of an appropriate target amount of each reserve, and how an RSE licensee will respond to insufficient reserves.

APRA's expectations of a Board Remuneration Committee including to review the Remuneration Policy and make recommendations to the Board on the individual remuneration.

Engagement of independent external advisers.

To explain the scope of the policy and matters to be addressed in the policy including:

• objectives and the structure of the remuneration arrangements;
• payments to non-employees;
• incentive-based remuneration; and
• termination payments.

Matters than can be considered when establishing a liquidity management plan and APRA's views on the processes a prudent RSE licensee would have in place including in relation to:

• determining a liquidity risk tolerance and identifying liquidity events;
• actions that may be taken to respond to a liquidity event; and
• liquidity stress testing.

Relevant matters which a valuation policy should address.

Sources of valuation and valuation approaches including factors to consider when using quoted market prices.

Factors to consider when determining the use of a valuation model.

Use of external investment managers and valuers.

Factors that APRA would expect an RSE licensee would consider when determining the adequacy of financial resources.

Information and documents that would assist an RSE licensee in demonstrating it is maintaining an adequate level of financial resources.

Information and documents that would assist an RSE licensee in demonstrating it is maintaining an adequate level of human resources.

An expectation that the RSE licensee will conduct due diligence when outsourcing material business activities.

Systems established by an RSE licensee should address:

• processing and validation of contributions from employers and members;
• policies and data collection processes in relation to accepting, classifying and allocating contributions; and
• processes to recognise and deal with fund-capped contributions, non-member contributions and contributions made in error (and determining whether the error is administrative or non-administrative).

Guidance on timing of contributions (including those made through a clearing house).

APRA's expectations as to RSE licensees applying discretion in relation to accepting contributions outside the age or gainful employment test.

Matters relevant to a defined benefit fund receiving contributions.

Policies and procedures in relation to acceptance, identification, processing of applications to pay, transfer or rollover benefits associated with:

• timeframes for payments on receipt of an application;
• data storage and processing to keep records of benefits and tax components;
• retirement or early release of benefits;
• illegal early release and identity crime situations;
• three business day processing requirements, circumstances when a RSE licensee would not be in breach and the process for applying for portability relief;
• pension payments including dealing with commutation restrictions and cash flow planning; and
• processing death benefit payments