AIST urges Government to stay the course on performance test extension

The Australian Institute of Superannuation Trustees (AIST) has again urged the Federal Government to extend the Your Future Your Super (YFYS) performance test to all Choice accumulation super products after media reports that government-appointed experts had suggested it not be extended.

AIST Deputy CEO and General Manager, Advocacy Mel Birks said reports that an expert working group was worried the unintended consequences of the annual MySuper test may be magnified in a Choice environment should not deter the Government from applying the test to all products regulated by the Australian Prudential Regulation Authority (APRA).

Ms Birks said it was important to test all APRA-regulated accumulation products, including Choice products, because the recent APRA Choice heatmap found they were higher cost and had a greater variance in performance than MySuper products on average.

“The Productivity Commission (PC) has also found that Choice products underperformed MySuper products on average and had a relatively long ‘tail’ of underperformance, which is significant given they account for $1 in every $3 in in APRA-regulated funds,” she said.

“It is important that the worst areas of underperformance in the super system are addressed by including all products in a performance assessment.

“This is also consistent with the PC’s view that all products should have simple and comparable dashboards and performance requirements.”

A Technical Working Group of independent economists, academics, investment advisers and representatives of retail and not-for-profit super funds has been working with Treasury to evaluate the performance test since last year as part of a broader review of YFYS measures.

The review included stakeholder consultation and public submissions such as this submission in which AIST said applying the performance test to all APRA-regulated accumulation products would enable the performance of funds not included the YourSuper comparison tool to be compared in a simple, accessible, comprehensive, and consistent manner.

Ms Birks said it was not reasonable to expect members of Choice products to assess their performance without the assistance of a consistent performance test.

 

Media inquiries: Garry West, AIST Senior Manager, Media and Communications: gwest@aist.asn.au|+ 0428 892 155

AIST is the peak body for the $1.7 trillion profit-to-member superannuation sector, which includes industry, corporate and public-sector funds