Jones confirms extension of YFYS test beyond MySuper

Minister for Financial Services, Stephen Jones, has confirmed he expects the Your Future, Your Super performance test to be extended by 800 funds from August. 

In conversation with Patricia Karvelas and Industry Super Australia, Jones discussed the YFYS legislation that was recently reviewed and was currently open for a second consultation on its proposed changes. 

This included proposed changes such as extending the lookback period from eight to 10 years and recalibrating some areas and investment classes that were being disincentized from investment such as property investment.

“We’ve made it more refined and detailed,” Jones said. “You should look at that as an initial response and that’s what we could get up and running so you could respond to it in time for the next assessment round in August.”

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As to whether the YFYS test would be extended to trustee-directed products, he noted this would extend the test to 800 products that was a “significant shift” for the government from the current test covering 70–75 MySuper products.

“If you are part of the RSE [registrable superannuation entity], if you are part of this universal system that I’ve talked about then there are some minimum obligations that should apply. My view is that the onus should be those that aren’t currently to be performance tested to justify why not. We should hold people to account for the performance of their part of the system,” Jones said. 

“There’s a whole bit we’ve got to digest between now and August where 800 new entities are going to be dragged, are going to be pulled within this. That is significant and that is a large body of work that has to be done.”

He also confirmed formal recommendations regarding super funds giving financial advice to their members will be issued “very soon”, a topic that had been raised in the Quality of Advice Review earlier this year.

He agreed it was currently difficult for funds in the current environment to give their members basic information and this was an issue the government sought to rectify.

He said: “We’ve got to find a way to deliver information and advice to members who are approaching retirement. Whether you like it or not one of the first phone numbers that they call is their superannuation fund. 

“At the moment, law passed by the previous Government, supported by me, puts an obligation on funds to put in place a strategy for their members for their retirement phase. At the very same time, we put in all these obstacles which make it almost impossible for funds to do anything about that so I’m keen on squaring that off.

“The Government gets the problem and I don’t think a continuation of the status quo is going to fix it. We think Australians have got to have access to better info and advice and there’s a role in all of this for legislative nudges and maybe defaults as well.”