In a statement issued on Thursday, minister for financial services Stephen Jones said the MySuper test will be reviewed to determine whether there have been any unintended consequences from the Your Future, Your Super (YFYS) reforms.
Having decided to review the operation of the performance test, the government said it will pause its extension beyond MySuper products for 12 months.
“Funds must always be held accountable for their performance. In doing so, accountability mechanisms must not simultaneously create perverse or unintended outcomes for members,” Mr Jones said.
“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,” he added.
The minister warned that “unnecessary regulatory measures can impose a significant administration cost on funds and their members”.
“In particular, the review will consider concerns relating to the regulatory complexity of best financial interests duty requirements.”
The minister assured that the review will not unwind ‘stapling’ measures which reduce the proportion of duplicate accounts or remove the requirement for trustees to meet high performance and probity standards.
In welcoming the government’s announcement, the Financial Services Council (FSC) said that given a “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,” said FSC executive director of policy and advocacy, Spiro Premetis.
“The broader review of YFYS will provide an opportunity to examine any unintended consequences of these important reforms, such as ensuring consumers have the option of selecting superannuation funds that align with broader goals such as ESG investing,” Mr Premetis noted.
The FSC also welcomed the government’s commitment not to unwind the stapling measures of the YFYS laws.
“Stapling is an important consumer protection and a key recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the Productivity Commission’s report into the efficiency and competitiveness of the superannuation system.”
