FINANCE Monitoring of super funds stepped up July 21, 2008 AAP
The prudential regulator will demand that superannuation funds justify year-end revaluations of unlisted assets in their portfolios in response to the slowing global economy and plunging stockmarkets.
The Australian Financial Review says retirement funds lost an average of 2.4 per cent in the 11 months to May 31, but the loss for the year to June 30 is expected to be more than double that - the worst result for two decades - after the S&P/ASX 200 Index fell nearly eight per cent in June.
It says the extent of the losses will depend on how super funds value their unlisted assets - such as direct property, infrastructure and private equity - which in some cases can account for more than half of a balanced fund portfolio but which are often repriced only once a year.
The deputy chairman of the Australian Prudential Regulation Authority, Ross Jones, told the paper: "You have an expectation that when the revaluations are done ... you are not going to find that every unlisted asset has gone up.
"When you look at the revaluations, you are asking (funds) for justification. They can't be random calls on the part of the trustee. There has got to be substantial documentation of how they reached those valuations."
Mr Jones said the specialist team established by APRA last year to monitor the banks' ability to cope with the credit crisis is also looking at super funds.
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