Performance test changes about Govt self-interest

Mike Taylor

Managing Editor and Publisher

11 May 2026

ANALYSIS

The Treasurer, Jim Chalmers, can dress it up any way he likes and headline the announcement as “Strengthening the Annual Superannuation Performance Test” but, in reality, the Government is simply looking to loosen particular superannuation fund investment constraints for its own benefit.

Right now, superannuation funds are constrained by the sole purpose test and other fiduciary duties from investing in areas such as social housing and infrastructure and what the Government is proposing is changing the benchmarks of the superannuation performance test to loosen those constraints.

Right now, superannuation funds are also highly conscious of the constraints of the currently superannuation performance test – something which has seen them cluster around an investment matrix which, while ensuring they do not fail the test – also ensures they avoid investing in risky sectors.

The Treasury consultation cites stakeholder feedback that examples venture capital, renewable energy projects and social and affordable housing as “assets poorly represented in the benchmarks” which make up the current performance test.

It noted that “some stakeholders have proposed adding new benchmark indices to better accommodate values-based investment approaches or emerging and alternative sectors”.

None of what the Treasurer announced will come as a surprise to the chief executives and chairs of the major industry funds. They have been part of discussions and consultations around such a prospect since Chalmers held his Economic Reform Roundtable soon after the Albanese Government was returned to power last year.

All the major superannuation fund stakeholders were last Wednesday and Thursday given a heads-up about Chalmers’ impending announcement which ensured that, by Friday, they had statements prepared broadly supportive of his proposed move.

The most salient point made in the Treasurer’s announcement referenced “the central role of Australia’s $4.5 trillion superannuation sector in supporting the efficient flow of capital across the economy to drive innovation and economic growth, while helping Australians achieve better retirement outcomes”.

The essence of the Government’s move is that it hopes to alter the performance test overseen by the Australian Prudential Regulation Authority (APRA) by adjusting the benchmarks for emerging and alternative assets while, at the same time, assessing risk-adjusted returns.

As a sop to those concerned about platform-based superannuation products, the Government is also canvassing extending the performance “test to more superannuation products”.

Extending the performance test to more superannuation products is a direct reference to the collapse of the Shield and First Guardian funds, but catching such products is a more complex exercise than simply rejigging benchmarks.

The bottom line is that the superannuation performance test was overdue to for an overhaul but the Government is acting as much out of economic self-interest as members’ best interests.