After recent mergers and if further planned mergers proceed, Australia’s superannuation landscape will consolidate to 12 funds with assets under management of more than $50 billion each, the data shows.
YFYS will change the super industry beyond recognition and there has been extensive discussion on the test’s design flaws, namely, its limited benchmark indices. In addition, the test’s exclusion of investment risk from the calculation is concerning according to Mercer's Barlow
Concerns remain about unintended consequences that are yet to arise, but Aware Super CIO Damian Graham believes the government’s second iteration of the performance test is a ‘reasonably pragmatic middle ground’.
Funds well ahead of the listed benchmark will have the luxury of continuing to focus on their CPI-plus or peer performance expectations and not be too concerned about the YFYS test in the near term, Frontier's Paul Newfield notes.
Those good, independent people are stuck watching on the sidelines, wearied by the endless circular debate as one set after another of hard-fought reforms and sensible recommendations is overtaken by further proposed changes.
A reluctance or lack of appetite by the Australian Prudential Regulatory Authority for enforcement against underperforming superannuation funds has likely played a role in the creation of the Your Future, Your Super performance test, a Senate Committee has heard.
Limited scope, benchmarking issues and a failure to identify diversification risks were some of the key issues plaguing the proposed performance test according to speakers called up by the Senate hearing in Sydney Wednesday morning.