Minister for financial services Stephen Jones has announced Your Future, Your Super (YFYS) performance tests will not be extended beyond MySuper products for 12 months while it undergoes a review.
In a statement, Jones said the MySuper tests would be reviewed after two rounds after annual tests and Treasury would determine whether it had had any unintended consequences for MySuper products and whether it should be applied to other products.
“Funds must always be held accountable for their performance. In doing so, accountability mechanisms must not simultaneously create perverse or unintended outcomes for members.
“The Government is aware of concerns that the YFYS laws have the potential to create such outcomes by discouraging certain investment decisions or certain infrastructure investments.
“Treasury will be tasked in its review to examine and consider the operation of the new laws in this context,” Jones said.
Responding to his comments, Financial Services Council executive director of policy and advocacy, Spiro Premetis, said: “Given the range of complexities with applying the test to a broader and more diverse range of superannuation investment options, the pause is the right outcome for consumers.
“Proceeding with the test without further consultation could have resulted in consumers being given misleading information about their superannuation funds’ performance.”
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The Association of Superannuation Funds of Australia (ASFA) welcomes the Government’s announcement of a Treasury review into the operation of the Your Future, Your Super (YFYS) Laws and the associated My Super performance test.
“The review is timely and appropriate. It is a positive move that will help improve accountability and performance of the wider superannuation system,” said Martin Fahy, chief executive of the Association of Superannuation Funds Australia (ASFA).
“After two years of operation it will allow the impact of YFYS measures on capital allocation to be assessed and address the challenges it presented for infrastructure and ESG-focused investments.”
Additionally, the Government would also shortly be releasing Exposure Draft legislation for consultation to implement its election commitment to adjust the performance test for faith-based products.
