Australia’s prudential regulator said on Wednesday it will review how sections of the A$2.5 trillion ($1.7 trillion) pension fund sector value unlisted assets and that it is already working with several funds whose practices need to improve.

As part of its supervision priorities for the next six months, the Australian Prudential Regulation Authority said it will conduct a “deep dive review” into valuation practices at a number of large and mid-sized pension funds.

The unnamed funds have material holdings of unlisted assets, a broad category which can range from office towers to private loans. The review will also look at how those funds manage liquidity.

Reuters reported last week the regulator had already asked funds to provide information for the review. Two of Australia’s largest pension funds, AustralianSuper and Aware Super, said they had received requests.

Chair John Lonsdale said the regulator was already working with funds which needed to improve, separate from the review.

“We want to push into it,” he said on a call with reporters. “What we’re saying to regulated entities … we want you to value appropriately, we want you to monitor, we want you to report it and we want it to be accurate.”

While APRA on Wednesday gave few details about the review, a private letter sent to the industry in November and seen by Reuters showed it included liquidity risks associated with exposure to unlisted assets like commercial property, private equity and credit.

Unlisted assets, whether wind farms and warehouses or private company shares, are popular in the pension sector and holdings can reach as high as 40% of all assets in some funds.

APRA has long been concerned about how the sector prices these assets which rarely trade. A 2021 review found revaluation frameworks were “typically inadequate”. New standards were introduced last July, including quarterly asset valuations.

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