The Operational Risk Financial Requirement (ORFR) levy on members’ account balances and DB assets no longer applies, having ceased from 1 July 2016.
As part of the Government’s Stronger Super requirements, super fund trustees were compelled under APRA’s Prudential Standard SPS 114 to build up and maintain an Operational Risk Financial Requirement (ORFR). The aim was to ensure trustees had access to resources to compensate members for any operational incident that may adversely impact their benefits. Super funds typically chose to progressively fund the ORFR from two sources – invested capital, and a reserve within the fund built up through a temporary levy on members’ account balances and any defined benefit assets.
The Mercer Super Trust adopted an approach of targeting an ORFR level of 0.25% of assets by meeting half from capital and the other half through a 0.058% p.a. member levy. The levy, which began on 1 January 2014, was disclosed to members as being in the range of 0-0.06% per annum.
We expected to attain the required level of ORFR by 30 June 2016 and having met this expectation means the levy ceased from 1 July 2016. However, please be aware that it may be re-introduced at some time in the future should the capital and reserve fall below the required level.