Extending performance test to MAs a bridge too far?

Mike Taylor

Managing Editor and Publisher

23 June 2026

The Treasury has been warned that applying the current superannuation performance test framework to separately managed accounts would be challenging and probably needs to be avoided.

Major superannuation industry organisation, the Association of Superannuation Funds of Australia (ASFA) has used a submission to Treasury to agree with the department’s internal analysis about the challenges with extending the test to managed accounts.

It pointed out that, typically, separately managed accounts are used by members under advice as part of a broader, tailored portfolio strategy – rather than as stand-alone products.

“Customisation of managed accounts, at the individual member level, can include substituting or excluding assets based on personal member preferences (such as ESG considerations); excluding or adjusting exposures to align asset allocation to fit broader portfolio strategy; and adjusting exposures to manage volatility or liquidity preferences,” it said.

“On this basis, and with reference to the existing performance test methodology, investment performance would be expected to diverge from the benchmark indices in the current test framework.

“Ultimately, this is likely to disincentivise member customisation and risk limiting innovation in offerings to members.”

The submission said there are a number of issues that should be addressed – in relation to the current application of the performance test – ahead of extending the test to externally directed products.

“The performance test should account for products with multiple investment pathways. Currently, where a product that is subject to the performance test has multiple investment pathways, that product will be assessed based on the asset-weighted average of the standard (highest) administration fee for each pathway and the lowest actual return (highest investment fee) across all pathways.

“Each pathway should be assessed separately, with consequences limited to the specific pathway,” it said.

“The performance test should better recognise tax outcomes for platform products. For platform products, tax outcomes are not pooled as they are for MySuper and most simple choice options but, instead, are attributed directly to individual member accounts.”

“The current tax adjustment for products that report gross investment returns does not accurately recognise the after-tax outcomes experienced by platform members – which can vary based on individual asset holdings, transactions and timing,” the ASFA submission said.

“The representative balance for platforms should be increased (from $50,000) to an amount more representative of platform products and would better reflect the administration fees for that balance. In addition, the dollar-based fees should be prorated against the average number of investment options held by members – which would be more realistic as to how fees are applied to member accounts.”

“Under the current scope of the performance test, assessed platform products (that is, platform TDPs) account for 3 per cent of the broader, comparable platform market – which is an unrepresentative basis for assessing administration fees (for the test). Under a transition to an extended performance test, administration fees for platform TDPs could be assessed relative to those for the broader, comparable set of platform products.”