YFYS and net zero targets ‘not working together’

The Your Future, Your Super (YFYS) performance test is not aligned with the Government's agenda to achieve net-zero carbon emissions by 2050, according to Mercer’s Jillian Reid.

Speaking at the Australian Superannuation Investment conference, held by the Australian Institute of Superannuation Trustees (AIST) in the Gold Coast, Jillian Reid, Mercer partner for sustainable investments, said there was indication from the new Government that it would become better aligned.

She said the Government would need to be “forward as well as backwards” in thinking about how it approached a review of the YFYS performance test.

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“At the moment you've got two arms of government giving us different directions,” she said.

“We can't have such fundamentals that are working in such direct conflict.”

Allaying the fears of superannuation trustees, Reid said while YFYS presented challenges , in the form of things like tracking errors, the key was to understand what was driving performance.

“You will get different performance out of this, but it just depends on as long as you understand what is driving that performance so much like the energy sector at the moment,” Reid said.

“Breathe everybody. This is what's happening over a short period of time.

“As long as you're understanding the construction of the index, where you will get the variations at particular points in time [and] what your timeframes are.

“As long as everyone's clear about what's happening and what's driving it, there shouldn't be the same knee jerk reaction that we're starting to get at the moment with this particular energy market.”

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