Industry Super Australia welcomes the federal government’s moves to strengthen new performance test laws and to ensure super funds are not penalised for investing in vital local infrastructure projects.
Spurred on by near universal feedback from the industry, the government is now ensuring the Your Future Your Super performance test better focuses on member outcomes and appears to now include administration fees.
The government has also seemingly taken a positive step to benchmark the performance of unlisted assets to more appropriate indices.
Both changes in the proposed regulations released today need to be examined in further detail, but ISA is willing to work with the government on further changes to get the best outcome for members.
The package needs to ensure members are not stapled to dud funds and to expand the testing regime to all APRA-regulated products.
Huge swathes of the ‘Choice’ sector are still carved out of the testing regime, so potentially millions of Australians could never be told their fund is inferior. Members are still able to be ‘stapled’ to a product that has not passed a performance test – running the risk they could be stuck in a dud fund for life.
The regulatory kill switch, which would allow the Treasurer of the day to ban any super fund investment or expenditure even if in the best financial interest of members, must be removed from the Bill. It is an ideological overreach the government has provided no justification for.
This power introduces sovereign risk into Australia’s $3 trillion super system and is ripe for abuse. Investing in Australia with confidence
will be more difficult if deals could be torn up for politically motivated reasons.
ISA will work with the government on changes to improve member outcomes, including:
· Expanded coverage to mandate that all funds and products – including the ‘Choice’ sector – must also pass the benchmark tests, with no carve outs;
· Ensure stapling only occurs to products that pass the performance test;
· Removing the regulation making power that gives politicians final say on all investments.
Comments attributable to Industry Super Australia chief executive Bernie Dean:
“We acknowledge the government has listened to stakeholder feedback and strengthened its performance tests, this is an important step in delivering more for members.”
“Now that seemingly all fees are included in the the test it is time that all funds are too – the worst performing products in the system should not be carved out.”
“Industry Super Australia will work with the government to ensure this reform package delivers for all super fund members.”