The Australian Prudential Regulation Authority (APRA)’s has released an information paper on its approach to administering the annual performance test for superannuation products.
One of the many complications of the performance test was applying it in a situation where there were changes within a product (changes to the structure of a product) or across a product change (where members had been transferred to a new product).
This would be done by:
The performance test was a two-part test that involved:
If the product underperforms the combined test by more than 0.5%, the product would be deemed to have failed the performance test.
If a product failed the performance test in two consecutive years, the registrable superannuation entity (RSE) licensee will be prohibited from accepting new beneficiaries into that product.
Investment performance would be assessed over a seven-year performance timeframe in 2021 and an eight-year timeframe thereafter.
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Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
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