Superannuation

Super funds with a responsible, ethical or sustainable focus will soon be subjected to the same performance test as their ‘default’ MySuper peers, as the Government confirms the extension of these superannuation performance test rules.

Proposal from the Australian Government for a legislated objective of superannuation being ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.’

Australian Treasury’s review of the Your Future, Your Super (YFYS) regime.

Exposure Draft of the proposed Superannuation Industry (Supervision) Amendment (Annual performance assessments—Faith-based products) Regulations 2022: FBPs from the Australian Treasury.

Australian Treasury’s consultation on proposed changes to the performance test for faith-based superannuation products.

With the enormous growth in responsible investment commitments globally, the focus of responsible investing is expanding beyond managing risk and avoiding harm, to quality stewardship and contributing measurably to positive, real world outcomes.

Super funds demonstrating leading practice responsible investment are taking a bigger share of the market and financially outperforming their peers, according to a new study from the Responsible Investment Association Australasia (RIAA). The study finds that one-quarter of super funds are demonstrating leading practice responsible investment, but these super funds hold 42% of total assets, compared with 28% in 2019. The study also shows that the majority (77%) of Australia’s largest super funds still have work to do in terms of transparency if they are to meet new legislative requirements to disclose their portfolio holdings publicly in 2022. The fourth edition of RIAA’s Responsible Investment Super Study 2021, sponsored by PIMCO, presents the results of a biennial survey of Australia’s largest super funds – accounting for $1.9 trillion in assets under management. The Super Study shows super funds that implement leading practice responsible investment continue to outperform their peers financially (87 basis points over 1 year and 56 over 7 years). The average performance of leading responsible investment super funds’ My Super products is better than non-leaders over 3-, 5- and 7-year timeframes.

The Australian Government’s announcement that superannuation funds will be required to disclose their holdings from 31 March 2022 has been welcomed by the Responsible Investment Association Australasia (RIAA). Under the new regulations, super funds will be required to disclose information about the identity, value and weightings of their investments, with portfolio holdings disclosure to occur every six months thereafter. “RIAA is supportive of and welcomes the introduction of mandatory portfolio holdings disclosure for super funds. We have advocated for many years that portfolio holdings disclosure is a critical element of transparency and accountability for super fund members and beneficiaries,” said RIAA CEO Simon O’Connor. “Disappointingly though, super funds will not be required to disclose the holdings of funds that are managed externally. Given almost three-quarters of super funds use external managers for over 90% of their assets, we would have expected the requirements to include these underlying holdings.”

Exposure Draft Regulations and Explanatory Statement for the Australian Government’s Your Future, Your Super (YFYS) package of reforms designed to make sure the superannuation system delivers better outcomes for members.

Recent extreme weather events in Australia have led the nation to pay closer attention to where its money is being invested, with 86% of Australians expecting their savings and super to be invested responsibly and ethically, according to new research commissioned by the Responsible Investment Association Australasia (RIAA). The study, finds that in the wake of the devastating bushfires, 3 in 4 Australians would consider moving their banking and superannuation to an alternative provider that invests responsibly and ethically, and that environmental issues (80%) are of greatest concern when investing their money. “This consumer sentiment mirrors the continuing growth of the sector with nearly half ($980 billion) of Australia’s assets under management now being invested through responsible investing” said RIAA CEO Simon O’Connor.