Treasury consultation sends a clear message – tweaks only on YFYS

Mike Taylor

Managing Editor/Publisher, Financial Newswire

8 September 2022

The Federal Treasury has made it clear that the while there may some tweaks to the methodology, the superannuation performance test is here to stay along with most of the Your Future, Your Super (YFYS) regime.

The Treasury consultation paper around its Your Future, Your Super Review makes clear that the department believes the legislative regime is having its desired impact and that, consistent with instructions from the Assistant Treasurer and Minister for Financial Services, Stephen Jones, it is only really interested in identifying and correcting unintended consequences

If superannuation fund trustees believed the Treasury review might soften the YFYS regime they will have been sorely disappointed, with the consultation document stating:

“Treasury is interested in stakeholder views about solutions which can build on and improve the operation of the test in order to further improve outcomes for members.”

“Given the substantial benefits to members, it will be important that ideas to address issues maintain the integrity of the test and its objectives: to increase accountability and transparency of product performance through an objective benchmarking test with clear consequences.”

“For the purposes of this paper, Treasury is seeking stakeholder input on the test methodology, the consequences of failure and product coverage,” the consultation paper said

Primary amongst the Treasury’s question on the performance test is: “Does the measurement of actual return using strategic asset allocation affect risk-taking behaviour by superannuation trustees?”

What the consultation paper also reveals, however, is that the YourSuper comparison tool co-designed by the Australian Taxation Office, (ATO), the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission has generated just 158,000 superannuation fund changes in 12 months

This low number is despite the tool having had over 1.5 million views since going live on 1 July, last year.

The consultation paper said that Treasury was interested in stakeholder feedback about whether the tool was having its intended effect to empower members and encourage competition and how best this could be measures.