AUSTRALIA - The Investment and Financial Services Association has called for stricter liquidity standards for investments held in superannuation funds.
"Superannuation members should be able to invest in illiquid assets as part of their investment diversification strategy. However, recent experience has brought into focus the need for consistent rules to govern funds (and investment options) with high levels of illiquid assets," the IFSA said in its submission.
In its submission to the Cooper Review, a review of the adequacy and operations of the country's pension system, the IFSA said illiquid funds or investment options should be defined as those holding 20% or more in illiquid assets.
The IFSA also said illiquid assets should be valued every 12 months and "should be required to align their redemption and valuation process to preserve equity and guard against arbitrage".
Also in its submission, the association said the capital requirement for the superannuation fund industry needed to be revisited.
"The minimum capital requirement for a superannuation fund was set in 1993 at A$5m (US$4.63m). This is ludicrous for a savings pool of over A$1trn in 2009," the IFSA wrote.
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