The superannuation performance test should be conducted in a two-stage approach and assessed by a panel of experienced industry professionals who are impartial, according to the chairs of major super funds.
In a submission to the government’s Your Future Your Super legislation, the chairs of Aware Super, Cbus, HESTA, QSuper, REST, and SunSuper said the performance test stages should be the benchmark test and an independent assessment.
They proposed the process would be:
The panel, they said, should be comprised of people who had an in-depth understanding of the funds management business, the objectives of super, and a clear sense of the policy objective of reporting rigorously and independently on performance will be the most effective way of implementing and supporting the objective of implementing the government’s policy objectives.
They also said an example criteria for the assessment would be:
The chairs noted the panel should advise on the determination for the asset class performance benchmarks including appropriate unlisted benchmarks, and overall fund performance targets, as part of the first hurdle criteria.
“We wish to make it quite clear that our proposal for a two-hurdle approach is not to evade clear accountability. We believe that poor performing funds that do not meet their promise to members should not be entitled to receive funds flow from a government mandated system,” they said.
“Indeed, the second hurdle will be particularly imposing for those funds that are called before the panel. No fund would want to get into that position.”
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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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