APRA has issued the following Reporting Framework FAQs: Defined benefit reporting FAQ 104: Does all of the information reported under item 1 of Reporting Form SRF 160.0 Defined Benefit Matters (SRF 160.0) need to be as at the same date? Abridged answer: Yes, these items are to be reported as the most up to date information available to the trustee as at the end of the reporting period, where all four items 1.1 to 1.4 were calculated as at a consistent point in time. For example, if a trustee is required to complete SRF 160.0 as at 30 June 2015 and it has available the following information at the following dates: • Item 1.1 – accrued benefits – as at 30 June 2013 (actuarial investigation) and 30 June 2014 (estimate); • Item 1.2 – vested benefits – as at 30 June 2013 (actuarial investigation), 30 June 2014 (estimate), 31 December 2014 (estimate) and 30 June 2015 (estimate);
Item 1.3 – minimum benefits – as at 30 June 2013 (actuarial investigation) and 30 June 2014 (estimate); and • Item 1.4 - Net assets available for members’ benefits (net of ORFR reserves) - as at 30 June 2013 (actuarial investigation), 30 June 2014 (estimate), 31 December 2014 (estimate) and 30 June 2015 (estimate), the trustee must report items 1.1 to 1.4 as at 30 June 2014, as this is the most recent consistent date of the information required. Insurance FAQ 99: Must an RSE licensee report insurance related flows on Reporting Form SRF 330.1 Statement of Financial Performance (SRF 330.1) and Reporting Form SRF 330.2 Statement of Financial Performance (SRF 330.2) in accordance with the fair and reasonable allocation processes required under s 99E of the SIS Act? Abridged answer: No, a trustee should report in the manner that the insurance-related flows operate in practice. The fair and reasonable allocation requirements under SIS, section 99E apply only to reporting of superannuation activities (items 3 to 7). APRA recognises the practical demarcation of superannuation activities and insurance activities within a typical fund. Therefore insurance related flows are not subject to the fair and reasonable allocation requirements under SIS, section 99E. However, where insurance occurs at the member level, apportionment may be required. In this circumstance, APRA expects insurance related flows to be reported in accordance with the manner in which premiums are deducted from the member’s account in practice. For example: a member holds interests in both a MySuper account and choice account within a fund but the trustee or member has determined that 100% of the member’s insurance premium will be deducted from the member’s MySuper account. Report about all of the insurance related flows in respect of this member on SRF 330.2 (MySuper), to reflect actual practice. SRF 331.0 FAQ 100: Must an RSE licensee report about all services undertaken on Reporting Form SRF 331.0 Services (SRF 331.0)? Should an RSE licensee apply a materiality threshold to items reported on this form? Abridged answer: Yes APRA considers that there is scope for a trustee to apply judgement in determining whether a particular service is undertaken with respect to a fund or not. Where a service is provided, but it does not affect the fund’s operation, APRA considers it reasonable for a trustee not to report this service on SRF 331.0. For the avoidance of doubt, all material outsourcing activities must be reported on SRF 331.0. Illustrative examples: • the engagement of a technician to repair photocopying equipment used by trustee staff could be excluded from reporting because the fund is not impacted by this arrangement; and • a trustee engages an actuary to undertake a one-off asset-liability modelling exercise in respect of the fund. The service provided by the actuary is one-off in nature and the engagement is not on a continuing
basis and is not a material outsourcing arrangement. Despite this, the trustee recognises that the actuary has been engaged to provide services with respect to the fund and it reports this arrangement. FAQ 101: How must an RSE licensee report multiple services provided under one arrangement in items 1 and 2 of Reporting Form SRF 331.0 Services (SRF 331.0)? Abridged answer: Where the trustee, or an external service provider provides multiple services with respect to a fund, the trustee must report each type of service, split by role type, on separate rows in items 1 and 2 of SRF 331.0. In practice, this means the trustee must: • complete all line items in respect of each role performed by the trustee or service provider; • where possible, report the expense associated with each role. Where an explicit breakdown of expense is not available, it is APRA’s expectation that the trustee should apportion the expense by role type on a basis that it considers reasonable; and • (in respect of an external service provider) if a trustee is not able to apportion the expense by role type on a basis that it considers reasonable, report the entire expense associated with that external service provider in the row that corresponds to the primary service provided. Report zero expense in each of the other rows for this service provider, to avoid a mandatory D2A validation. Investments Reporting FAQ 103: How are RSE licensees required to report counterparty credit ratings to APRA on Reporting Form SRF 532.0 Investment Exposure Concentration (SRF 532.0) and Reporting Form SRF 534.0 Derivative Financial Instruments (SRF 534.0), when directly held debt investments, or counterparties to over-the-counter derivative contracts, have been rated by more than one credit rating agency? Answer: APRA requires RSE licensees to report counterparty credit ratings for “directly held investments – large exposures”, in item 1, column 8 on SRF 532.0. In addition, APRA requires RSE licensees to report counterparty credit ratings for counterparties to over-the-counter derivatives contracts in item 4, column 2 on SRF 534.0. The counterparty credit ratings, used for the purposes of APRA reporting requirements, are generally consistent with long-term credit ratings provided by credit rating agencies. APRA’s reporting instructions state that where an RSE has an investment with multiple ratings from two or more credit rating agencies, the RSE licensee must consistently apply the lowest rating where the individual ratings conflict. The reporting instructions do not require an RSE licensee to solicit credit ratings from each of the credit rating agencies which provide a rating on that particular investment or counterparty. If the RSE licensee has only solicited credit ratings from one credit rating agency, then the credit rating from the single ratings agency is to be used to determine counterparty rating grades to be reported to APRA. Where an RSE licensee has solicited credit ratings from multiple ratings agencies, the RSE licensee must consistently apply the lowest: • issuer credit rating awarded by the credit ratings agencies, whenever the individual ratings on a directly held debt investment, conflict. The issue credit ratings will be used for the purposes of reporting to APRA in item 1, column 8 on SRF 532.0.
issuer credit rating awarded by the credit ratings agencies, whenever the individual ratings on a counterparty to an over-the-counter derivative contract, conflict. The issuer credit ratings will be used for the purposes of reporting to APRA in item 4, column 2 on SRF 534.0. Profile and Structure FAQ 102: Noting APRA’s ongoing consultation on the reporting requirements for select investment options, should I still complete item 6.2 of Reporting Form SRF 601.0 Profile and Structure (RSE) (SRF 601.0)? Abridged answer: Yes. Item 6.2 of SRF 601.0 must be completed with reference to the existing definition of a select investment option, set out in the Interpretation section on pages 6 and 7 of the instructions to SRF 601.0. APRA has temporarily removed the requirement to report select investment options on Reporting Form SRF 001.0 Profile and Structure (Baseline) which is used to allocate the correct reporting forms to each trustee within D2A. However APRA still requires trustees to report information in respect of select investment options, under the existing definition, under SRF 601.0. Changes to the select investment option reporting requirements are expected to take effect from 1 July 2015. APRA has also issued the following Prudential Practice Guides FAQ: FAQ 4: How should funds under management (FUM) be determined for the purpose of calculating an ORFR target amount? Abridged answer: FUM for this purpose should be determined as net assets available to pay members’ benefits. APRA has identified an error in Prudential Practice Guide SPG 114 Operational Risk Financial Requirement (SPG 114) under paragraph 9, which states: “For the purposes of calculating the ORFR target amount, APRA views FUM as the total of asset balances of each RSE within the RSE licensee’s business operations.” This paragraph should refer instead to “the balance of net assets available to pay members’ benefits”. APRA will amend the SPG 114 in due course, to accurately reflect the correct reference. APRA has amended the following Reporting Framework FAQs: Defined benefit reporting FAQ 23: Are Reporting Form SRF 160.0 Defined Benefit Matters (SRF 160.0) and Reporting Form SRF 160.1 Defined Benefit Member Flows (SRF 160.1) to be reported for each sub-fund as well as each defined benefit RSE? Insurance FAQ 86: What amount must be reported in Reporting Form SRF 161.0 Self- Insurance (SRF 161.0) or Reporting Form SRF 250.0 Acquired Insurance (SRF 250.0), for income protection insurance cover and claims? SRF 330.0 FAQ 44: Some data items in Reporting Form SRF 330.0 Statement of Financial Performance (SRF 330.0) are not currently captured in
an RSE licensee’s systems. How should these be reported before the implementation of the SuperStream Data and Payment Standards? Investments Reporting FAQ 60: Where an indirectly held investment contains derivative contracts, how should those derivative contracts be reported on Reporting Form SRF 530.1 Investments and Investment Flows (SRF 530.1) and Reporting Form SRF 530.0 Investments (SRF 530.0)? FAQ 97: How should an RSE licensee incorporate derivative exposures when reporting directly held and indirectly held investments on Reporting Form SRF 533.0 Asset Allocation (SRF 533.0)? SRF 700.0 FAQ 75: How should an RSE licensee that currently uses an investment objective expressed as a percentile of the distribution (e.g. 25th percentile) report their return target on the MySuper product dashboard (per the requirements in Reporting Standard SRS 700.0 Product Dashboard (MySuper) (SRS 700.0))?