HESTA to pay members impacted by March 2020 revaluations
Make us a preferred source
Make us a preferred source on Google
The news: Superannuation fund HESTA has agreed to make payments to two groups of members impacted by valuation decisions made by the group in March 2020.
The context: The Australian Prudential Regulation Authority (APRA) said that on 20 March 2020, HESTA made downwards adjustments to five single sector 'Choice' options invested in unlisted assets, but did not adjust other options with exposure to the same underlying unlisted assets, including HESTA's 'MySuper' option, until one week later.
APRA said it was concerned that HESTA's decision-making processes for out-of-cycle revaluations of unlisted assets were "not adequate" for the deteriorating market conditions faced by superannuation trustees during the onset of the Covid-19 pandemic.
The regulator also noted that HESTA's valuation decision in March 2020 was unfair to members who switched from an adjusted single sector options to unadjusted options within that week and members who were issued units in the unadjusted options during the relevant week.
In one instance, a member who switched investments from the adjusted 'Choice' options to the unadjusted 'MySuper' option during the week in question was approximately $17,000 worse off, APRA said.
The regulator said it has engaged extensively with HESTA on the matter, including supervision activities to oversee strengthening of HESTA’s policies and procedures around unlisted asset valuation decisions.
In light of HESTA's decision to make payments to affected members to make them good, and improvements to HESTA’s valuation policies and procedures, APRA has decided to close its investigation without further action.
The source: APRA media release
