Superannuation Portfolio Holdings Disclosure is finally happening

The requirements

Last year, global research house Morningstar found Australia has the world’s “weakest disclosure regime” and suffers from a lack of regulations mandating transparency on fees and portfolio holdings. Morningstar finds it remarkable that Australia remains the only market with no implemented portfolio holdings disclosure regime. 

That will soon change – finally, after the Australian Government first introduced superannuation portfolio holdings disclosure requirements into the Corporations Act in 2012, they will commence on 31 December 2021.

Under these requirements, trustees of superannuation funds must make specific information about each of the fund’s investment options publicly available on its website no later than 90 days after each reporting day. This includes sufficient information to identify each investment asset in each investment option along with the value and the weighting or exposure of each investment asset.

The Australian Securities and Investments Commission (ASIC), Australia’s corporate regulator, has deferred these requirements several times in response to industry concerns and the absence of regulations setting out how the superannuation funds were to comply with the requirements.

The Government released a final exposure draft of the portfolio holdings disclosure regulations for consultation in August 2021. The regulations set out how a fund must present the information regarding its portfolio holdings, including tables showing how to organise portfolio holding information and that it be easily downloadable and readable.

In releasing the regulations, Senator Jane Hume, Minister for Superannuation, said: “These changes will further support strengthening the transparency of the superannuation system and assist members in making more informed decisions”.

Consultation on the revised exposure draft regulation and explanatory statement is open until 31 August 2021, and funds are hoping that the final regulations will be released with plenty of time to have systems in place by the 31 December 2021 commencement date.

Data is at the centre of disclosure

Superannuation funds have plenty on their plate with the introduction of the Your Future, Your Super Package and it is crucial that the portfolio holdings disclosure requirements receive the attention they deserve. The devil will be in the detail, and funds should not assume that they have the necessary data to meet the requirements.

Funds should review the draft regulations and their portfolio holdings to assess the gap between the information they currently hold and what will be required to comply with the regulations. If they haven’t already done so, funds will need to engage with third-party fund managers to ensure that they are willing and able to provide this information. This might be particularly challenging with overseas fund managers.

Without the infrastructure and capability to take the data it receives from various sources and efficiently turns it into the reporting requirements, funds may struggle to collate the information efficiently and accurately. Therefore, spreadsheets should not be seen as a long-term solution.

The superannuation portfolio holdings disclosure requirements are another excellent reason superannuation funds should consider an enterprise investment data management platform like AlphaCert.

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