New guidelines are to be introduced to provide clearer information for consumers about the risk of their superannuation funds’ investments.

From June next year the Australian Prudential Regulation Authority (APRA) will require superannuation funds to publish a standardised measure of the risk of negative returns on their investments over a 20-year period.

Risk will be classified in seven bands, from very low to very high, based on the estimated number of negative annual returns possible over 20 years.

The guidelines were devised at APRA’s request and with the assistance of the Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council.

“Having a clear understanding of risk is just as important as being aware of fees or returns,” Financial Services Council chief executive John Brogden said in a statement.

“With a wide variety of investment options available across a large number of funds, it is essential that investment risk is fully disclosed and comparable.

“The standard risk measure will ensure consumers are more aware of the investment risk in the option they have chosen and will enable them to compare apples with apples when looking at different investment options.”

The changes are a response to long-held concerns that consumers have not been easily able to compare risk levels in investment options.

AAP