Benchmarking tests are going to need to be reviewed in the future, according to Labor’s Stephen Jones, as there are several anomalies in the system.
Speaking at the Responsible Investment Association of Australasia conference in Sydney, Jones, shadow minister for financial services, said there were several issues within the Your Future, Your Super benchmark test.
“The Your Future, Your Super legislation, particularly the benchmarking tests are going to need to be reviewed because there have already been unintended consequences. We want to ensure that the efforts to flag investment returns and their costs doesn’t interfere with the equally-proper objective of funds to drive social and economic outcomes.
"There are a bunch of areas that need to be looked at, we won't just throw it out but there are definitely some areas for finetuning. I'll let it run for a full cycle which is two years and we'll use that time to work out what a more streamlined approach would look like."
He also highlighted an “alarming anomaly” around the treatment of faith-based superannuation funds. This had been flagged as there were concerns the asset allocation to meet faith-based objectives could differ from those of the benchmark.
“We have announced an intention to address an alarming anomaly around the benchmarks of faith-based funds and they could be driven out of the market. That is a perverse outcome for a Government that champions the role of choice in superannuation and investment,” he said.
He added he wanted superannuation funds to invest responsibly in assets that drive social change.
“We know Australians want to see banks and super funds not just talking about environmental, social and governance (ESG) but also rolling up their sleeves and driving change in these areas.”