Australian Government’s Superannuation Reform Bill Faces Challenges Despite Revision
The Australian government’s proposed changes to the superannuation fund performance test have faced criticism after the opposition said the Bill should not be supported following the inclusion of some controversial proposed reforms.
Treasurer Josh Frydenberg and Superannuation Minister Jane Hume released the consultation draft regulations for the new Your Future, Your Super (YFYS) reform package on April 28 as a response to the concerns voiced by the superannuation industry to 2 major changes to the fund performance test.
In the Senate Standing Committee’s on Economics report into the YSYF reform released on April 29, Labor noted that the proposed Bill would damage retirement outcomes of Australians and subject our superannuation system to risk.
AIST chief executive, Eva Scheerlinck, said: “While we welcome the shift on more appropriate benchmarks and administration fees in the performance measures, the regulations unfortunately confirm widespread carve-outs to performance testing, including for the worst performing super products.
“Crucially, some of the worst-performing superannuation products have been carved out of performance testing, putting consumers at risk of being stapled to a dud fund for life which will actually reduce retirement outcomes.”
Scheerlinck said at least one-third of super funds, including those identified by the Productivity Commission as worst performers, would not be subject to the performance test, and any new MySuper products would not be subject to the test for the first five years.
AIST calls Senate Committee to reject YFYS bill moneymanagement.com.au - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from moneymanagement.com.au Daily Mail and Mail on Sunday newspapers.
ASFA chief executive, Dr Martin Fahy, said: Australian superannuation funds’ strategic asset allocation, including the significant allocation to unlisted investments, has been an important element in their outperformance compared to international peers. The changes announced today have the potential to mitigate investment distortions foreshadowed by the industry when the benchmark was first announced.
ASFA also welcomed the announcement that administration fees would be included in the performance test. Including all fees in the proposed benchmark will help align the benchmark to the reality of the returns members see in their superannuation, and help address any anomalies that different cost definitions might cause when comparing the performance of different products, Fahy said.
YFYS performance test tweaks to enhance accuracy, transparency professionalplanner.com.au - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from professionalplanner.com.au Daily Mail and Mail on Sunday newspapers.