Policy & Research

We undertake evidence-based advocacy to influence public policy settings which ensure the best retirement outcomes for fund members.

Best Practice Papers

ASFA Best Practice Papers are only available to ASFA organisational members. You can find out more about becoming an organisational member in the Membership section.

ASFA’s Best Practice Papers are intended to provide superannuation funds and their service providers with information about an array of concepts, processes and methodologies to address relevant issues.

The consultative approach used to prepare Best Practice Papers, which includes contributions from industry representatives means that the findings, models and methodologies contained in them are representative of the highest (and most independent) thinking available from a diverse cross-section of the industry.

The concepts contained in Best Practice Papers provide a considered analysis of the key issues, together with sound and prudent principles that can be developed and adapted to your organisation’s particular situation. However, careful consideration should be given, including rigorous testing, before deciding whether or not to implement the processes outlined in this paper to ensure they are suitable and relevant for your particular circumstances.

ASFA has taken the decision to rationalise the number of Best Practice Papers it will maintain and update. The 12 papers below are those which ASFA will continue to maintain.

Fund governance

The ASFA Active Share Ownership Guidelines have been developed to provide assistance to superannuation trustees in formulating their own policies and procedures to bring about improved responsiveness from the companies in which they own shares. The ASFA Guidelines seek to complement existing corporate governance standards, such as the IFSA June 2009 Blue Book and the ASX Corporate Governance Council Guidelines. The aim of this Best Practice Paper is to encourage trustees to exercise their voting rights more extensively, either directly or through external fund managers or other service providers, and to monitor corporate governance issues more carefully in view of greater political and regulatory pressures.

The governance benchmark for superannuation trustees should be higher than that of listed companies, because of the compulsory nature of the system. ASFA’s updated Governance Best Practice Paper effectively provides a guide for funds to run their trustee office.

Issues addressed in the paper include:

  • Tenure and succession planning for the Trustee Board
  • Code of Conduct
  • Conflicts and Board assessment
  • Delegation Monitoring and Reporting
  • Engagement of external service providers
  • Accountability to members

Implementing legislation

The amendments to the Family Law Act 1975 and associated regulatory changes have had considerable implications for superannuation fund trustees and their administrators. This Best Practice paper has been prepared by ASFA to assist trustees and administrators to understand and to implement the law. The paper was updated in March 2005 and reflects all amendments to the relevant legislation and associated regulations to that date. Notable changes include provision in the SIS Regulations enabling trustees to initiate the creation of a new interest for the non-member spouse (section 9 of the paper) and new requirements in relation to binding death nominations (section 11). The paper also contains a revised Appendix 3 on Procedural Fairness.

The aim of this updated best practice paper is to give trustees and administrators:

  • broad exposure to the language, concepts and operation of the family law and superannuation reforms;
  • some more detailed information on relevant aspects of the regime for trustees such as giving effect to splitting orders and agreements; and
  • some best practice guidance for trustees.

Because of its breadth and complexity, it is impossible for this paper to cover all of the issues surrounding the implementation of the new family law and superannuation reforms. Any information provided or guidance given should therefore not be construed as covering all aspects of the reforms. The paper should, however, make it easier for trustees and administrators to understand the framework of the reforms and equip them to better to navigate through the myriad pieces of legislation. Where practical, the paper identifies the particular sections of acts or regulations that apply to a topic to assist in further reading.

Correction to section 4.5.1
This paper has been updated to reflect the fact that provision of information for Family Law purposes to the non-member spouse is a taxable supply subject to GST, while the provision of information to the member spouse is an input taxed supply (on which GST is not charged).

Insurance

The provision and insurance of death and disability benefits accounts for a significant proportion of trustee time. This best practice paper aims to assist trustees to design appropriate death and disability benefit structures, to negotiate suitable insurance policies, and to develop administrative and decision-making procedures to deal with claims from members.

While the paper is written from the perspective of externally insured accumulation funds, many of the issues raised are relevant to defined benefit funds and self-insured funds. The paper considers issues such as benefit design, communication, choosing an insurer, processing claims and dealing with common problems. A list of best practice recommendations is included.

Superannuation trustee boards, committees and staff spend a large amount of time dealing with the assessment and payment of death benefits. Despite this, in 2013-14 complaints relating to death benefit made up 32.5 per cent (the second largest category) of all written complaints made to the Superannuation Complaints Tribunal (SCT).

The purpose of this paper is to provide best practice guidance on a broad range of issues facing trustees in the management of death benefit claims. To achieve this requires a fair degree of explanation of the legal framework. As a result, the 3rd edition of this best practice paper (January 2015) is more comprehensive than its predecessors. However this paper should not be construed as legal advice.

Appendix 1 contains a number of case studies on a broad range of court decisions and SCT determinations. These have been selected on the basis of their usefulness in illustrating the key principles that have evolved in this area.

Appendix 2 includes information on the interdependency provisions in the SIS Act and SIS Regulations. This information has been included as an appendix to the paper due to its extensive nature.

Trustees are also referred to the SCT’s paper Key considerations that apply to death benefit complaints, 2006 and their Death Benefits brochure, 2014 (both of which are available from the SCT's website www.sct.gov.au).

There have been significant developments within the superannuation industry both in terms of policies available and the cover they provide. This has resulted in an increase in the number of options available to trustees to find a suitable policy or policies to address their specific risks. The first version of this paper was produced in 1994, with subsequent editions in 1996, 1998 and 2004. Developments within the superannuation and insurance industries since that time have resulted in the need for further revision.

This revised (2011) Best Practice paper aims to:

  • help trustees to understand the different types of insurance policies available in the market;
  • provide some guidance on essential and desirable policy features; and
  • assist trustees to negotiate adequate and cost-effective insurance policies.

Investment

Investing is a core capability of super funds. Traditionally, it has been outsourced, but in recent years there is a trend towards insourcing parts of the function. Trustees may face recommendations from management or consultants to insource. The aim of this paper is to evaluate the challenges facing Trustees who are considering those recommendations.

It draws on research and current practice of funds, investment managers, consultants and academics to identify the elements of governance, process and risk management, which together, could be seen to reasonably represent best practice. The concepts contained in this paper provide a considered analysis of the key issues, together with sound and prudent principles that can be developed and adapted to your organisation’s particular situation.

A working group of members of the ASFA Investment Policy Sub Committee and the ASFA Best Practice Policy Committee have extensively reviewed this 2006 ASFA Best Practice Paper. The distressed investment markets during the past four years have accentuated the accountability of superannuation fund trustees to ensure that the investment decision-making process within their funds is clearly delineated, documented, and understood by internal and external investment service providers.

The paper provides guidance to trustees to develop investment management processes and to devise and implement appropriate investment strategies by:

  • outlining the main relevant legislative and regulatory requirements;
  • considering the role of the trustee in the investment process;
  • maintaining a consistent set of investment principles to increase the probability of trustees meeting their members' investment objectives;
  • identifying typical practical issues trustees should consider; and
  • providing best practice guidance on how to deal with some of these practical issues.

ASFA has updated the BPP 12 Negotiating Investment Management Agreements (IMAs), so that it:

  • provides the context of preparing an IMA and guidance to trustees around negotiating and drafting IMAs so as to address recent industry developments
  • provides a regulatory checklist mapping the Superannuation Industry (Supervision) Act (SIS Act) and Australian Prudential Regulation Authority (APRA) requirements for IMAs
  • includes a template IMA.

The ASFA template IMA has been drafted from the superannuation trustee’s perspective. It differs from the previous version of the best practice paper by placing more responsibility and liability on the investment manager and reflects all of the new SIS Act and APRA requirements (as cross referenced in the regulatory checklist included).

Unlisted investments are often referred to as “alternate investments” and they have become a significant asset class for superannuation funds. This paper has been prepared to give superannuation fund trustees guidance on the valuation and liquidity issues that they should take into consideration when making and holding unlisted investments in their investment portfolios.

Risk management

This updated version of Best Practice Paper 19: A risk management framework for superannuation funds is one of ASFA’s two central best practice papers, along with Best Practice Paper 7:Superannuation Fund Governance.

Beyond the satisfaction of the risk management requirements imposed on Registrable Superannuation Entity (RSE) licensees by the SIS Act and Regulations, this paper considers better practice risk management developments and practices specifically tailored for the superannuation environment and is designed to provide trustees and fund executives with the useful tools to develop and implement an effective risk management program for their fund.

The Best Practice Paper provides comprehensive commentary as well as a step-by-step approach (including practical examples) that can be followed in order to implement the trustee’s risk management processes.

The User Guide is designed to accompany the Best Practice Paper and provides useful references to various important sections within the paper.

The Trustee Summary is a subset of the Best Practice Paper and is specifically designed to highlight the important issues which superannuation trustees should consider when establishing or updating their risk management framework, including the governance role of the trustee with respect to risk management issues.

This paper, which is a companion paper to the ASFA Best Practice Paper 19: A risk management framework for superannuation funds, has been prepared to provide trustees with the knowledge and tools required to implement the policies and processes necessary to manage the risk of fraud and corruption.

Fraud and corruption are both widely recognised as significant areas of potential risk requiring specific attention by trustees of superannuation funds. In recent times there have been increasing numbers of publicised incidents within the superannuation industry that, in the broadest context, could be considered to be fraudulent activity. The third edition of this paper (revised November 2011) places the subject matter in a superannuation industry context and incorporates various practices that trustees should consider implementing in order to manage the risk of fraud and corruption.

This paper has been prepared in line with Australian Law and the expectations of the Australian Prudential Regulation Authority (APRA) and addresses the need for trustees to develop a liquidity risk management framework. The paper also discusses the various matters that trustees should consider in meeting their obligations in regard to liquidity management, including identifying the liquidity risks relevant to their fund (risk appetite assessment), implementing appropriate mitigating controls (such as cash flow analysis and stress testing at the investment option and fund level), procedures for ongoing monitoring, the escalation and reporting of liquidity concerns and regular compliance reporting.