Net returns vital to outcomes says AIST

Another key superannuation body has raised serious questions about the Government’s proposed ‘outcomes’ test, warning that it risks diluting the vital role of net investment returns in delivering optimal retirement outcomes for superannuation consumers.

The Australian Institute of Superannuation Trustees (AIST) has used a submission to the Treasury responding to the Government’s draft legislation to claim that it did not give sufficient weight to net returns.

AIST chief executive, Eva Scheerlinck noted that the outcomes test would require trustees of regulated superannuation funds to consider the appropriateness and quality of their MySuper product offering on an annual basis.

“Trustees will be required to assess whether the outcomes being delivered by their MySuper products are promoting the financial interests of their MySuper members,” she said.

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“What really matters to members is the amount of super they receive when they retire,” Scheerlinck said. “Net returns must be the number one consideration for any outcomes assessment.”

 The AIST chief executive said that rather than the Government’s proposed outcomes test which gives equal weighting to a range of criteria, AIST had recommended a two-tiered process that gave net returns precedence over other criteria, such as services provided and facilities offered.

The AIST submission had also called for the assessment – that is currently limited to MySuper options – to apply across all sectors of the industry. 

“Choice investment options have more money invested in them than MySuper, yet on average they underperform and cost more,” Scheerlinck said. “In a compulsory super system, best practice and standards should be delivered for all super consumers.” 

Similarly, AIST argues that proposed enhancements to APRA’s direction powers and its penalty regime should apply to the Choice sector as well.