The Albanese Government will ensure that all superannuation trustees are held to account for the performance of their funds.
The performance test administered by the Australian Prudential Regulatory Authority has been effective at shining a light on underperformance in the MySuper sector.
The Albanese Government is updating the benchmarks used to measure fund performance and extending the scrutiny to many more products in the Choice sector where we know there is significant underperformance.
APRA’s recent Superannuation Choice Heatmap found one in five choice investment options had significantly poor performance over eight years. Around 30 per cent of products had significantly high administration fees.
The insights highlight that many members are at risk of poor retirement outcomes. Subjecting more superannuation products to performance testing means members can see how their fund is comparing to others. It also means members will be individually notified if their fund is underperforming.
Following consultation on draft regulations and the Your Future, Your Super review, the Government will update the regulations for the August 2023 performance test.
The updated test will address unintended consequences identified in the Your Future, Your Super review, while ensuring it is more fit‑for‑purpose for Choice products. The changes include:
- The minimum testing period will be increased in line with the increase of the longer-term investment testing ‘lookback’ period.
- Key benchmarks will be calibrated to ensure that funds are not unintentionally discouraged from investing in certain assets.
- In assessing the RAFE (representative administration fee) for trustee-directed products (TDPs), platform and non-platform products will be benchmarked against a median fee relevant to this category.
The Government will continue to explore and consult on further changes that improve the sophistication of the test to scrutinise underperformance across superannuation products.
