The test aims to “hold RSE licensees to account for underperformance through greater transparency and increased consequences”.
If a product fails the test in two consecutive years, the RSE licensee will be prohibited from accepting new beneficiaries into that product.
Speaking at the Women in Banking and Finance Forum on Friday, Margaret Cole addressed how APRA will enforce improvements to superannuation member outcomes through the test.
“These government reforms enable APRA to impose the most significant consequences yet for underperformance in superannuation and to hold trustees to account where they fail to put their members’ best financial interests first,” Ms Cole said.
“I bring a strong conviction that enforcement is a vital tool for regulators to use, both to hold people and companies accountable, and to warn others. In part, that stems from my experience in the private sector: while I understand the challenges businesses often face complying with regulations, I’m also well-acquainted with what they will try to get away with.
“In four days’ time we will release the first performance test results covering all MySuper products. Many super members will learn for the first time, and in crystal clear language, that their retirement savings are in a product that has failed the test.
“We don’t yet know what impact this heightened transparency will have, but it’s reasonable to think many members will head to the ATO’s YourSuper comparison tool seeking somewhere else to invest their money.”
Ms Cole added that though Australia’s super system is praised as one of the best in the world, it is still “under-developed” compared to other jurisdictions.
“So now is the time for all parties involved in the superannuation system – policy makers, regulators, super fund trustees – to tackle this important topic to ensure that members are well-served by their superannuation funds when they reach the retirement stage,” she said.
Ms Cole’s comments come after APRA confirmed that no product will be exempt from having its performance test results published.