Submissions on strengthening the superannuation performance test will begin trickling into Treasury’s inbox next week ahead of the 19 June deadline.
One commonsense reform that should be on everyone’s list is extending coverage of the test.
The performance test is not perfect but has been one of the most effective consumer safeguards introduced in recent years. By holding products to account for long-term returns and fees, it has lifted standards and sharpened outcomes across the system. As the super system evolves, the test must evolve with it.
Right now, there is a clear and concerning gap. A significant share of super assets still sit outside the performance test’s scope, leaving millions of Australians blind to the performance of their super investments, which is a key transparency measure in other parts of the system like MySuper products.
Currently, around 41% of assets in APRA-regulated super funds are not covered.
The fact that tens of thousands of Australians have been exposed to products like the collapsed Shield and First Guardian schemes — which weren’t subject to the performance test despite being able to receive compulsory super contributions — shows why closing these gaps is urgent.
Expanding the performance test to cover platform products and other excluded investments would bring consistency, accountability and transparency to all corners of the system, giving consumers more clarity when making financial decisions about their future.
The Government also needs to strengthen the integrity of the test by addressing ‘fee gaming’.
Under the current settings, administration fees are assessed over the most recent 12 months, compared to a 10‑year horizon for investment performance, opening the door to tactical gaming – short-term fee reductions and even reimbursements – that can mask the fact that a super product is delivering poor returns.
As different corners of industry outline their positions in the coming days, two things are clear:
- The performance test is a critical consumer safeguard
- Every Australian with super deserves its protection
