{"id":"F2024L01319","name":"Superannuation (prudential standard) determination No. 6 of 2024","slug":"superannuation-prudential-standard-determination-no-6-of-2024","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":105416,"registerId":"commonwealth-F2024L01319-current","compilationNumber":null,"startDate":"2026-04-03","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Authority","sectionType":"part","heading":"Authority","content":"# Authority\n\n1.  This Prudential Standard is made under section 34C of the Superannuation Industry (Supervision) Act 1993 (SIS Act).","sortOrder":0},{"sectionNumber":"Application and commencement","sectionType":"part","heading":"Application and commencement","content":"# Application and commencement\n\n1.  This Prudential Standard applies to all registrable superannuation entity (RSE) licensees (RSE licensees).[\\[1\\]](#_ftn1)\n2.  The requirements of this Prudential Standard apply for the purposes of section 52(8)(b) of the SIS Act.\n3.  This Prudential Standard commences on 1 July 2025.","sortOrder":1},{"sectionNumber":"Interpretation","sectionType":"part","heading":"Interpretation","content":"# Interpretation\n\n1.  Where this Prudential Standard provides for APRA to exercise a power or discretion, the power or discretion is to be exercised in writing.","sortOrder":2},{"sectionNumber":"Adjustments and exclusions","sectionType":"part","heading":"Adjustments and exclusions","content":"# Adjustments and exclusions\n\n1.  APRA may adjust or exclude a specific requirement in this Prudential Standard in relation to:\n    1.  a particular RSE licensee of an RSE; or\n    2.  specified RSE licensees of RSEs.","sortOrder":3},{"sectionNumber":"Previous exercise of discretion","sectionType":"part","heading":"Previous exercise of discretion","content":"# Previous exercise of discretion\n\n1.  An RSE licensee must contact APRA if it seeks to place reliance, for the purposes of complying with this Prudential Standard, on an exercise of discretion by APRA made under a previous version of this Prudential Standard.","sortOrder":4},{"sectionNumber":"RSE licensees that are part of a group[2","sectionType":"part","heading":"RSE licensees that are part of a group[2]","content":"# RSE licensees that are part of a group[\\[2\\]](#_ftn2)\n\n1.  Where an RSE licensee is part of a corporate group, and the RSE licensee utilises group policies or functions, the Board must approve the use of group policies and functions and must ensure that these policies and functions have appropriate regard to the RSE licensee’s business operations.","sortOrder":5},{"sectionNumber":"Operational risk financial requirement","sectionType":"part","heading":"Operational risk financial requirement","content":"# Operational risk financial requirement\n\n1.  An RSE licensee must maintain, manage and utilise, in accordance with this Prudential Standard, financial resources to protect beneficiaries from losses due to operational risks[\\[3\\]](#_ftn3) that relate to the RSEs within its business operations.[\\[4\\]](#_ftn4)","sortOrder":6},{"sectionNumber":"ORFR strategy","sectionType":"part","heading":"ORFR strategy","content":"# ORFR strategy\n\n1.  An RSE licensee must formulate and give effect to an ORFR strategy that sets out how it will meet the ORFR. At a minimum, the ORFR strategy must include the RSE licensee’s:\n    1.  ORFR target amount and tolerance limit, including how and why it has determined these amounts to be appropriate;\n    2.  processes and parameters for determining when and how the ORFR financial resources can be used;\n    3.  approach to holding the ORFR financial resources, including how the RSE licensee will ensure that the requirements in paragraphs 16 and 17 (as applicable) are met on an ongoing basis;\n    4.  investment strategy for operational risk reserves held to meet the ORFR target amount;\n    5.  process for implementing a replenishment plan in accordance with paragraph 18 (replenishment plan);\n    6.  review process for the ORFR target amount, tolerance limit and ORFR strategy; and\n    7.  process for managing the financial resources held to meet the ORFR target amount in the event that the RSE licensee or RSE is wound up.\n2.  The Board must approve the ORFR strategy and is ultimately accountable for ensuring the implementation of the RSE licensee’s ORFR strategy.","sortOrder":7},{"sectionNumber":"ORFR target amount and tolerance limit","sectionType":"part","heading":"ORFR target amount and tolerance limit","content":"# ORFR target amount and tolerance limit\n\n1.  For the purposes of paragraph 9, an RSE licensee must determine:\n    1.  a target amount of financial resources (ORFR target amount); and\n    2.  a tolerance limit below the ORFR target amount (tolerance limit). Where ORFR financial resources fall below the tolerance limit, the RSE licensee must take action to replenish financial resources to meet the ORFR.\n2.  An RSE licensee’s ORFR target amount and tolerance limit must be determined on a prudent basis that suitably reflects:\n    1.  the RSE licensee’s operational risk profile and risk assessments;\n    2.  the uses of the ORFR financial resources permitted under paragraph 15; and\n    3.  the size, business mix and complexity of the RSE licensee’s business operations.\n3.  If APRA considers that the ORFR target amount and/or tolerance limit set by the RSE licensee does not adequately reflect the requirements of this Prudential Standard, APRA may require an RSE licensee to:\n    1.  meet an ORFR target amount determined by APRA, within a specified time; and/or\n    2.  adopt a tolerance limit determined by APRA.","sortOrder":8},{"sectionNumber":"Use of ORFR financial resources","sectionType":"part","heading":"Use of ORFR financial resources","content":"# Use of ORFR financial resources\n\n1.  An RSE licensee must only use ORFR financial resources for one or more of the following:\n    1.  to address operational risks that could reasonably be considered to have caused or could cause one or more beneficiaries in an RSE within the RSE licensee’s business operations to sustain a loss, or to be deprived of a gain to which they otherwise would have been entitled;\n    2.  to meet the requirements of Prudential Standard CPS 230 Operational Risk Management for the effective management and prevention of operational risk incidents, including the remediation of identified material weaknesses and maintenance of critical operations within tolerance levels through severe disruption; and\n    3.  to reduce a surplus where ORFR financial resources are materially larger than the ORFR target amount.","sortOrder":9},{"sectionNumber":"Access to ORFR financial resources","sectionType":"part","heading":"Access to ORFR financial resources","content":"# Access to ORFR financial resources\n\n1.  To be eligible to meet the ORFR target amount, any ORFR financial resources held as an operational risk reserve within an RSE must:\n    1.  be separately identifiable from member accounts and reserves held in the RSE for other purposes; and\n    2.  be unrestricted and readily available to address operational risks in a timely manner.[\\[5\\]](#_ftn5)\n2.  To be eligible to be used to meet the ORFR target amount, any ORFR financial resources held as trustee capital must be held in a form that is equivalent to Common Equity Tier 1 Capital.[\\[6\\]](#_ftn6)","sortOrder":10},{"sectionNumber":"Shortfall management","sectionType":"part","heading":"Shortfall management","content":"# Shortfall management\n\n1.  Where the level of ORFR financial resources falls below the tolerance limit, an RSE licensee must implement a replenishment plan and replenish the ORFR financial resources. Replenishment must occur within a period and in a manner the RSE licensee determines will ensure that the RSE licensee acts fairly in dealing with beneficiaries and minimises the risk of adverse outcomes for beneficiaries.[\\[7\\]](#_ftn7) The replenishment plan must, at a minimum, explain:\n    1.  how the shortfall has arisen;\n    2.  the amounts that apply in relation to each RSE;\n    3.  how the RSE licensee will replenish the ORFR financial resources, including the source of funding; and\n    4.  the expected date for the RSE licensee to again meet the ORFR target amount.\n2.  An RSE licensee’s replenishment plan must be approved by the Board prior to implementation.\n3.  APRA may require an RSE licensee to revise its replenishment plan if APRA considers that the plan does not comply with the RSE licensee’s duties and obligations.","sortOrder":11},{"sectionNumber":"Review and audit","sectionType":"part","heading":"Review and audit","content":"# Review and audit\n\n1.  An RSE licensee must review the appropriateness of its ORFR target amount and tolerance limit at least annually and following a material operational risk incident or material change to the RSE licensee’s business operations. The findings of the review must be reported to the Board.\n2.  An RSE licensee must implement satisfactory internal audit procedures and external audit arrangements to ensure compliance with, and the adequacy and effectiveness of, the ORFR strategy.[\\[8\\]](#_ftn8)\n3.  APRA may require the appointment of an external expert to provide an assessment of, and report on, the adequacy and effectiveness of, the RSE licensee’s approach to meeting the requirements of this Prudential Standard. The report must be paid for by the RSE licensee and must be made available to APRA, together with the Board’s preliminary response within 30 business days after it has been provided to the RSE licensee.","sortOrder":12},{"sectionNumber":"Notification requirement","sectionType":"part","heading":"Notification requirement","content":"# Notification requirement\n\n1.  An RSE licensee must notify APRA prior to making a material change to the ORFR target amount.","sortOrder":13}],"analysis":{"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The instrument applies to all RSE licensees and sets prudential requirements for operational risk financial resources, governance, review and reporting. It does not introduce new classes of entities into scope; it imposes additional prudential duties on the existing population of RSE licensees rather than expanding who is covered."},"complexity_factors":["Universal application to all RSE licensees but with APRA power to adjust or exclude requirements (Adjustment/exclusion discretion)","Multiple mandatory governance steps: Board approval of ORFR strategy and replenishment plans (ORFR governance)","Quantitative determination obligations: setting a prudent ORFR target amount and tolerance limit tied to risk profile, size and complexity (measurement and calibration)","Prescriptive eligibility and form requirements for eligible resources, including trustee capital equivalent to Common Equity Tier 1 (access and capital form constraints)","Operational constraints on use of funds (limited permitted uses and separate identifiability from member accounts)","Shortfall management and timing expectations, including Board-approved replenishment plans and APRA power to require revisions (implementation deadlines and funding sources)","Review, internal audit and external audit obligations, and APRA power to require and receive an external expert report paid for by the RSE licensee (compliance costs and third‑party involvement)","Interaction with group arrangements where group policies/functions are used, requiring Board oversight (group coordination and allocation of responsibility)","Formal procedural requirements for APRA exercises of discretion to be in writing and notification requirement prior to material changes (administrative formality)"],"plain_english_summary":"This Prudential Standard requires every registrable superannuation entity (RSE) licensee to hold, manage and report on dedicated financial resources to cover operational risks (an ORFR), and to adopt a Board‑approved ORFR strategy with target, tolerance, replenishment and review arrangements. It gives APRA power to adjust requirements and to require external assessment. The measure affects RSE licensees, their boards and beneficiaries by creating defined funding, governance, reporting and audit duties and associated compliance costs."},"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":4,"scope_assessment":{"changed":false,"description":"This appears to be a focused, single-purpose prudential standard specifically addressing operational risk financial requirements for superannuation funds. It replaces or updates previous versions of the same standard (referenced in paragraph 6 regarding previous exercises of discretion) without expanding into unrelated areas. The scope remains tightly constrained to operational risk reserves and their management."},"complexity_factors":["Moderate cross-referencing to external standards (CPS 230 Operational Risk Management)","Multiple defined terms (ORFR, ORFR target amount, tolerance limit, RSE licensee) but contained within the document","Conditional logic around when replenishment is required (below tolerance limit triggers)","Nested requirements in the ORFR strategy (7 specific minimum components listed in paragraph 9)","Regulatory discretion provisions allowing APRA to override fund determinations in multiple sections","Dual pathways for holding resources (operational risk reserve within RSE vs trustee capital equivalent to Common Equity Tier 1 Capital)","Footnote references to undefined external concepts (Common Equity Tier 1 Capital) without explanation"],"plain_english_summary":"Superannuation trustees (RSE licensees) must maintain a dedicated Operational Risk Financial Requirement (ORFR) — a cash reserve to cover losses from operational failures (cyberattacks, fraud, processing errors) rather than investment losses.  \n\nBoards must approve ORFR strategy, targets and replenishment plans, with regular reviews; APRA can require changes. The regime strengthens protection of members’ retirement savings by ensuring funds can address operational losses without tapping investment balances."}},"importantCases":[],"_links":{"self":"/api/acts/superannuation-prudential-standard-determination-no-6-of-2024","history":"/api/acts/superannuation-prudential-standard-determination-no-6-of-2024/history","analysis":"/api/acts/superannuation-prudential-standard-determination-no-6-of-2024/analysis","conflicts":"/api/acts/superannuation-prudential-standard-determination-no-6-of-2024/conflicts","importantCases":"/api/acts/superannuation-prudential-standard-determination-no-6-of-2024/important-cases","documents":"/api/acts/superannuation-prudential-standard-determination-no-6-of-2024/documents"}}