Funds’ views on superannuation performance test enhancement diverge

InvestorDaily

Submissions to Treasury on the superannuation performance test reveal varying opinions among funds on how to best enhance the rules to ensure the best retirement outcomes for their members. Last month, the government announced a review of the design options for the annual superannuation performance test, noting evidence suggesting that “the test may be influencing investment decisions to the detriment of member outcomes”. However, it also acknowledged that the test has improved member returns by increasing scrutiny on underperforming products and holding trustees accountable.

While there is consensus among Australia’s largest funds that the test has been instrumental in delivering better outcomes to members, they presented varying recommendations for the path forward. In its submission to Treasury, $82 billion fund HESTA proposed evaluating the funds’ performance against an inflation target or industry peers with similar risk profiles across various time frames to pinpoint consistent underperformance. “In considering the proposed metrics and principles, HESTA believes a multistage outcomes-focused test would be more effective and enduring in identifying consistently underperforming funds as well as identifying strong net member benefit,” the fund explained.

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