Rest Tightens Liquidity Oversight in Response to US Tariffs

Rest Super is increasing its monitoring of cash buffers in an effort to stay ahead of potential member withdrawals, as recent changes to US trade policy create new volatility in markets and investor behaviour. The $93 billion retirement fund raised concerns with its regulator, aiming to protect liquidity, though this could require the fund to sell assets quickly in a falling market.

Rest, one of the largest superannuation funds serving retail workers, took the unusual step of notifying the Australian Prudential Regulation Authority (APRA) about the need for enhanced oversight. This move followed market disruption caused by newly announced US tariffs. On April 8, just days after the US introduced sweeping trade measures, Rest adjusted its strategy to protect its portfolios. The fund anticipated that worried members might shift their super from shares into cash.

At that point, global equity markets had already taken a sharp hit. The S&P 500 had dropped more than 12%. When members move their investments from higher-risk assets into cash during a downturn, funds like Rest may be forced to meet redemption requests under time pressure, which can lead to losses. Although US trade policy softened shortly after and markets stabilized, Rest and APRA continued close liquidity monitoring for nearly a month, underscoring the uncertainty super funds continue to face from unpredictable US policy decisions.

Australia's $4.2 trillion superannuation industry is watching these developments closely. As US trade and tax reforms remain in flux, many large asset managers are reevaluating their US exposure. Some have even paused new investments in the United States due to growing geopolitical tensions and the potential impact on funds that are heavily invested in American markets. Rest maintains that its recent actions reflect careful risk management rather than a reaction to immediate crisis.

At the same time, APRA has been reviewing broader governance and risk management practices at Rest. An independent assessment identified key gaps that must be addressed before stricter regulations come into effect in July. Internally, Rest is also facing difficulties retaining staff in risk management roles, leading to questions about its long-term capability. However, the fund says it continues to operate within approved liquidity levels.

Liquidity remains a top priority for super funds, particularly during market volatility. Members nearing retirement are more likely to shift into low-risk investments during uncertain periods, which increases the demand for cash. After the early release withdrawal scheme during the pandemic took many funds by surprise, institutions like Rest began improving their liquidity tests and contingency plans. The sector has made progress since then, though regulators continue to insist that financial resilience must remain a priority.

Source: Australian Financial Review, Australian Prudential Regulation Authority, Frontier Advisors