Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p61
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 61/76)
Character Range: 206101–209311

critical importance in understanding a superannuation entity's overall financial position (solvency), irrespective of whether there is a surplus or deficit, and such risk is more in the nature of non-performance or economic dependency risk than credit risk; and
(e)                   additional liquidity risk disclosure about any non-financial liabilities other than tax liabilities of a superannuation entity can be justified on the basis that trustees are required to have an investment strategy that has regard to the entity's overall circumstances, including the liquidity of its investments and its expected cash flow requirements.  Accordingly, entities with non-financial liabilities other than tax liabilities (such as provisions) would be expected to have considered the relevant liquidity risks and how they will be managed for prudential purposes.  In this regard, the AASB noted that many superannuation entities would not have material non-financial liabilities other than those related to tax.
BC195        Based on its deliberations on the comments on ED 179, the AASB decided ED 223 should propose:
(a)                   a superannuation entity apply the principles and requirements in AASB 7, as appropriate, and should only include guidance considered necessary to facilitate their application in a superannuation entity context;
(b)                   a superannuation entity make disclosures consistent with the types of information disclosed under AASB 7 in relation to the liquidity risks arising from any non-financial liabilities other than tax liabilities; and
(c)                   a superannuation entity with defined benefit members provide qualitative disclosures about non-performance risk and/or economic dependency risk relating to the employer-sponsor(s).
BC196        Respondents to ED 223 expressed concerns that a requirement to disclose qualitative information about non-performance risk and/or economic dependency risk to which the plan is exposed in relation to employer-sponsors would give rise to 'boilerplate' disclosure.  This is because, in some cases, the trustees would have no more information about a superannuation entity's reliance on employer-sponsors than is already publicly available and, in other cases, such a requirement might put the trustees in a position where they have to make judgements about the overall viability of an employer that may already be the subject of speculation in the business community.
BC197        Some respondents suggested the disclosure should instead focus on the process superannuation entities use to assess risks associated with employer-sponsors, or provide information focusing on the funding plans of a superannuation entity in relation to defined benefits.
BC198        In relation to defined contribution member liabilities, the AASB concluded the disclosure principles in AASB 7 would be relevant.  However, in relation to defined benefit member liabilities, the AASB considers most of the disclosure principles in AASB 7 are not readily applicable, and concluded AASB 1056 should set out disclosure principles and related guidance on explaining the quantitative and/or qualitative information that would be useful,