The Government has released the outcome of its review into Your Future, Your Super (YFYS).
Feedback to the consultation from stakeholders was primarily focused on the annual performance test and minister for financial services, Stephen Jones, said this formed the first part of the Government’s response.
This would seek to address several unintended consequences of the test identified in the review, while maintaining the test’s integrity.
Key updates included:
Jones said common complaints about the test had included that it could unintentionally affect investment decisions to reduce the risk of failure by encouraging short-termism and benchmark hugging as well as discouraging certain investments.
Values-based products were a key example of where the investment strategy may deviate from benchmarks.
They also noted the existing test could be adjusted in the short term to reduce these consquences while retaining the integrity and more substantial changes could be made in the long term.
In response, Jones said: "The performance test will be fine‑tuned with updates to the benchmarks that can be implemented within the timeframe for the 2023 testing period. The lookback period will also be progressively extended from eight to 10 years which will help to reduce short‑termism and support investments that can generate strong returns for members over a longer time period.
"The Government will give further consideration to other changes that may be necessary to improve fund performance."
Consultation on the draft regulations was open until 2 May 2023 and updates would be implemented prior to the August 2023 performance test.
The superannuation industry will be judged by its member services rather than how effectively it accumulates wealth, according to Stephen Jones.
The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members.
Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award.
A research firm has given UniSuper a glowing review, praising its strong leadership and “compact team”, as well as its “creditable governance” structure.