7 July 2022

Review to strengthen super

The Albanese Government will always look for ways to strengthen Australia’s world‑class superannuation system and maximise returns to Australia’s superannuation fund members.

That’s why we have tasked Treasury to review the operation of the Your Future, Your Super laws (YFYS laws) after the second round of MySuper performance tests have taken place by August this year.

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.

With two rounds of annual tests completed, the review will consider whether the performance test has had any significant unintended consequences for MySuper products and assess how the test should be applied to other superannuation products.

Having decided to review the operation of the performance test we will pause its extension beyond MySuper products for 12 months.

This will provide time for the review to take place and for the Government to consider and consult on any changes to ensure the test is fit for purpose given the significant variety and complexity of these products.

In addition, the review will also consider whether there have been any unintended consequences from other YFYS reforms.

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 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.

As part of the review, Treasury will be undertaking public consultations, details of which will be announced soon.

The Government will also shortly be releasing Exposure Draft legislation for consultation to implement its election commitment to adjust the performance test for faith‑based products.

In addition, consultation will soon commence on Exposure Draft regulations for amendments to the annual members’ meetings disclosure requirements in the Superannuation Industry (Supervision) Regulations 1994.