Meg's Musings – October 2026

Apart from the start of Daylight Savings, I do love October. My travel schedule quietens down and I get to re-immerse myself in something meaty we’re covering in our October masterclass series. This time, it’s Division 296 tax and I’m looking forward to delivering it with Lyn Formica next week (get your ticket here if you haven’t already). 

I did pause for long enough to read APRA’s latest proposals to “strengthen trustee investment governance and better protect members’ retirement savings” (released 30 September 2026 : read it here). While this will only relate to APRA regulated super funds, not SMSFs, it’s always interesting to see what’s happening on the other side of the fence.

One challenge APRA is trying to solve is that many large super funds offer significant investment choice to members, perhaps in an attempt to mimic some of the flexibility SMSFs can provide. Since members (with the help of their advisers) choose the investments they want from that menu, accountability becomes a little unclear. The trustee of the fund is charged with responsibly constructing the menu while the member is on their own when it comes to choosing from the menu. 

APRA proposes to attack this problem from both sides – tougher obligations on trustees in constructing the menu as well as limitations on the choices the member makes.

On the menu construction side, APRA has proposed far greater obligations on platform trustees to deal with conflicts involving promoters, advisers and others as well as a requirement on trustees to limit their menu to one they have the “capabilities and resources” to manage effectively. 

When it comes to members, the proposal is that trustees are required to set (and enforce) hard limits on “concentrated higher-risk” options. For example, a platform might set an upper limit of 10% on any single ASX share. If a member already had 10% of their super balance in that share, the platform would be expected to make sure they couldn’t buy any more (although it wouldn’t be required to sell down any holdings they already have). Limits set by platforms would operate within some overall limits set by APRA – the proposal is a cap of 20-30% on particular investment options. The goal here is to reduce concentration risk and encourage diversification. Many platforms already have limits like these – perhaps the concern is those who don’t already do so as well as those who don’t enforce their existing rules.

It will be interesting to see the unintended consequences here. Will this be seen as an(other) attack on the advice industry? Something that limits their ability to advise clients as they see fit and in fact pushes some advisers towards SMSFs.

There will undoubtedly be some complexity to work through. Clearly there’s a big difference between holding 100% in a highly diversified ETF (which wouldn’t be included in the cap) and 100% in a single share on the ASX (which would). These examples are simple. The more complex cases will lie in the middle somewhere – how diversified would an ETF need to be to avoid being subject to the cap? All this detail is to come.

I’m old enough to remember the old days when all super funds (industry, corporate, SMSFs alike) had to comply with what was known as the “30/20” rule to get the super tax concessions. I can’t remember exactly how it worked but it was something like : 30% of the fund’s investments had to be in public securities, including 20% in Commonwealth Bonds.  It was introduced in the 1960s to help the Government invest in public infrastructure. Perhaps we’ll see a comeback?  

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