Session recording and slidesInvestment strategy

Your Future, Your Super: An Interactive Session

The Your Future Your Super (YFYS) reforms will re-shape the superannuation industry from a structural, investment and outcomes perspective. In this digital break-out session the investment community comes together in a safe environment to discuss their views on YFYS.

Speakers:

  • Emily Barlow, Senior consultant, Mercer
  • David Bell, Executive director, Conexus Institute
  • Andrew Boal, Chief executive, Rice Warner
  • Nick Callil, Head of retirement solutions, Willis Towers Watson
  • Moderator: Colin Tate, Chief executive, Conexus Financial

View David’s presentation slides here

Key Takeaways

  • A group of asset consultants and researchers have asked Treasury and policy makers to consider the possibility that “zombie funds” could be created as one by-product of the government’s new performance test.
  • Further, the group has said that future consolidation among superannuation funds could be stalled if the performance test is implemented as planned in 2021 in its current form.
  • Andrew Boal, Rice Warner’s chief executive, joined Mercer senior consultant Emily Barlow, Willis Towers Watson Nick Callil and the Conexus Institute’s David Bell to discuss the proposed Your Future, Your Super reforms in light of a detailed review into the proposed reforms the group released in late November along with Frontier and Jana.
  • Based on a statistical analysis of the proposed Your Future, Your Super performance test, the review found that for the case studies considered the measurement has between a 42 per cent – 65 per cent chance of misidentifying a bad performer as a good performer, and a 35 per cent chance of mistakenly identifying a good fund as poor.
  • The lack of consideration of risk taken at the portfolio level and performance attributable to asset allocation decisions are among the main criticisms identified by the detailed review.
  • The group’s paper also highlighted potential unintended consequences stemming from funds changing how their manage tracking error to meet the listed performance benchmark, particularly as it related to owning unlisted assets.
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