Treasurer Jim Chalmers is set to overhaul the superannuation performance test, a move that could unlock riskier investments for funds while offering greater protections for retirees. The proposed changes aim to strike a balance between encouraging higher returns and safeguarding members' savings.
Key Changes to Super Performance Test
The current test, introduced in 2021, evaluates super funds based on their investment returns relative to benchmarks. Under the new plan, the test would be broadened to include a wider range of asset classes, potentially allowing funds to invest in higher-risk assets such as private equity, infrastructure, and venture capital. This shift is designed to boost long-term returns for members, but critics warn it could expose retirees to greater volatility.
Protecting Retirees
Alongside the expansion, the government is proposing stronger safeguards for retirees. These include enhanced disclosure requirements and a new 'retirement income test' that would assess how well funds support members in retirement. The changes aim to prevent retirees from being left with inadequate savings due to poor fund performance.
Industry stakeholders have responded with cautious optimism. The Association of Superannuation Funds of Australia (ASFA) welcomed the focus on retirement outcomes but urged the government to ensure the test remains robust. 'We need to balance innovation with member protection,' said ASFA CEO Dr. Martin Fahy.
The proposed overhaul follows a review of the superannuation system, which found that while the performance test has improved accountability, it has also discouraged funds from investing in assets that may deliver higher returns over the long term. Chalmers is expected to release a consultation paper in the coming weeks, with legislation potentially introduced later this year.
