The Research And Enlightenment Of Risk-Based Supervi For Superannuation In Australia

Recently, in many developed countries and emerging market economies, enterprise annuity have become an important pillar of the old-age security system, and the assets it deposited has been an important source of income for retiree. Thus, the protection of pension fund security has become increasingly important, which requires the country to adopt effective approaches to supervise the pension fund for guaranteeing the benefits of beneficiaries according to law.As the second pillar of the pension system of Australia, the assets of the superannuation fund have increased significantly, had grown to﹩1.6trillion in June2013. For guaranteeing the benefits of superannuation beneficiaries and standardizing the market of superannuation, the Australian government has adopted Risk-Based Supervisory Approach for it. Risk-Based Pension’s Supervision provides a structured approach focusing on identifying potential risks faced by pension funds and assessing the financial and operational factors in place to mitigate those risks. This process then allows the supervisory authority to direct its resources towards the issues and institutions which pose the greatest threat.Along with the increasing trend of population aging as well as the falling of basic social security insurance replacement rate in our country, the enterprise annuity will play a more and more important role. Thus it is necessary for us to use for reference the experience of developed countries, to strengthen the regulation of enterprise annuity, prompting them to value and increase value of assets. As the accumulation of enterprise annuity fund assets and the increasing enterprise annuity coverage, the regulation of enterprise annuity fund in our country should be solved perfectly as soon as possible.This paper starts with the introduction of Australian superannuation system’s development and the management mode of the pension funds, to phase in the existing regulatory organization framework and their regulatory methods Risk-Based Supervisory Approach. According to the detailed combing of regulatory organization framework and regulation approaches, put forward the ideas of perfecting our country’s enterprise annuity supervision system. Conclude the part which will suit our regulation for enterprise annuity fund, and establish the basic structure of our supervision model, for better guaranteeing the benefits of beneficiaries and promoting the orderly operation of financial markets. Except this, introduce the challenges we will face, if we gradually introduce the Riske-Based Supervision method to our country.This dissertation consists of five chapters:The first chapter will mainly introduce the background, implications, contents and innovation of my research.The second part will give a brief introduction of Australia Superannuation plan, including the implication of the Superannuation plan and the management mode of its assets.The third part will be mainly about the supervision authorities. The private pension system in Australia is subject to regulation and supervision by three main authorities, i.e. the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, and the Australian Taxation Office. The forth chapter will give an elaborate summary of the Risk-Based Supervisory Approach. The process includes four parts, i.e. Risk Identification, Risk Assessment, Quality Assurance, and Supervisory Response. The first section of this chapter will focus on the two kinds of risks the superannuation fund will face, they are individual risk and system risk, the second section will be mainly about risk indicators, risk mitigation, risk weightings and the rating of failure’s probability and impact. The last section of this chapter will be all about the Supervisory Oversight and Response System.The last chapter of this paper will talk about the inspiration for establishing our country’s supervision model arising from the Risk-Based Supervisory Approach in Australia.The innovation of this dissertation is introducing a new concept into our pension supervision system. There were hardly any discussions or researches about Risk-Based Supervisory Approach for enterprise annuity in domestic academic. According to the development of our enterprise annuity plan, I also focus on the risks it might meet in operation. Finally, I try to design a new supervision model for our enterprise annuity fund.The main weaknesses of this dissertation are as follows:First, because of the complexity of the superannuation fund operation, it is difficult to intuitive to show the effect of Risk-Based Supervisory Approach to the superannuation fund. Second, the risks which will be faced by our enterprise annuity fund are not summarized comprehensive in this paper. Third, Due to the limited capacity, I cannot establish the detailed supervision model for our enterprise annuity fund, what I structured is just a basic model.