The Productivity Commission (PC) has claimed that its approach to superannuation investment performance has been misrepresented by some sections of the media and commentators.
Importantly, the PC has also dismissed a narrow focus on past performance.
Responding to a letter of concern from MTAA Super chief executive, Leeanne Turner, PC deputy chair, Karen Chester together with commissioner, Angela MacRae responded with a letter stating that the PC had acknowledged the importance of taking account of risk when comparing the investment performance of superannuation funds and products.
The PC letter said it had also acknowledged that volatility in investment returns was particularly important for some members that were close to retirement.
“Our investment performance assessment informs our system-level assessment of the competitiveness and efficiency of the superannuation system,” it said. “This is distinct from the selection criteria to inform the proposed 'best in show' assessment by an expert panel.”
“Some media and commentators have wrongly conflated the two,” the PC letter said.
“The Commission agrees that risk should be a relevant consideration for any expert panel selecting default superannuation products,” it said. “In our stage 3 draft Inquiry report, we suggested that an expert panel should consider the match between a product's long-term investment return target and risk profile for the types of members who typically default, as well as the likelihood of producing long-term returns for members.”
“We do not consider that a narrow focus on past performance in isolation would be appropriate or desirable,” the PC letter said.