Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p63
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 63/76)
Character Range: 211922–215275

for management's use; and
(d)                   the approach is consistent with that proposed for other disclosures, such as disclosures about risks and risk management arrangements.
BC203        Some respondents to ED 179 agreed with the principle of having segment disclosures, particularly if they result in improved disclosures about risks attaching to different member groups.  However, many other constituents expressed concerns about requiring segment-type disclosures because such requirements would:
(a)                   make some entities' note disclosures excessively long and complex, thereby diminishing their overall usefulness; and
(b)                   not assist users in understanding the overall financial position and performance of an entity that has member groups with different entitlements but 'pools' all its assets for investment purposes.
BC204        Of significance to many constituents were the potential practical implications of applying a segment-type approach in a superannuation context, including identifying segregated groups of assets.  While trustees generally manage member liabilities on a segregated basis, most pool assets to achieve efficiencies.  Some respondents expressed concern that some relatively common situations that arise with pooled assets may nevertheless satisfy the criteria for managing assets on a segregated basis.  For example, they were concerned entities that provide investment choices to members may be required to treat each investment choice as a segregated asset group because entities' trustees might often:
(a)                   adjust actual allocations between asset classes within a particular investment option to match target allocations following movements in investment markets; and
(b)                   adjust actual allocations of assets between investment options to match member liabilities.
BC205        Others were concerned about applying the proposals to master trusts and multi-employer-sponsored plans, some of which have in excess of 100 sub-plans, which comprise members with the same or related employer-sponsors.  While trustees generally monitor the financial position of sub-plans in relation to defined benefit members on a regular basis, they do not monitor the financial performance of each sub-plan because a significant proportion of the plan's expenses are not capable of being reliably attributed to individual sub-plans.  Accordingly, given the likely cost of determining, presenting and understanding this information, it is unlikely the ED 179 segment disclosure proposals would give rise to sufficient benefits in the context of master trusts and multi-employer-sponsored plans.
BC206        Others are keen to avoid duplication of effort, by aligning any segment-type disclosures with prudential reporting requirements.
BC207        Based on responses to ED 179, the AASB:
(a)                   noted that a significant number of superannuation entities are managed by their trustees on a segmented basis, although segmentation will often not be clear from the way the entity's assets are managed;
(b)                   decided that disaggregated financial disclosures would provide useful information for users, particularly for hybrid entities because they are exposed to different types and levels of risks; and
(c)                   decided