Download the full submission here, for responses to consultation questions.
RIAA supports the objectives of the Government in providing best practice principles, being to provide for superannuation trustees on the design and delivery of high-quality retirement income solutions to their members.
However, we note that superannuation policy and guidance cannot be considered in isolation to the broader legal and regulatory framework – this includes any connection between the accumulation and retirement phases of superannuation.
While the consultation paper notes the interaction between the proposed principles and existing legal obligations and duties of trustees, it is silent on how the principles will impact on (and the use of the principles be impacted by) other obligations, in particular the trustees’ need to comply with the annual superannuation performance test (performance test).
Noting that the Government wants to improve the effectiveness of the retirement income system to “empower Australians to make the most of their retirement as they live longer and healthier lives” and give “Australians more choice”, the performance test could act as a barrier to the manner in which trustees are able to provide products to meet member and consumer needs.
The Australian Government recognised this in its 2024 consultation on the design of the annual superannuation performance test, noting the concerns raised by stakeholders that the test:
- focuses on investment implementation over other measures of performance;
- encourages short-term decision making;
- incentivises benchmark hugging;
- does not provide investment flexibility; and
- reduces choice, diversification, and active management.
RIAA urges the Government to progress its reform of the performance test without delay prior to establishing additional, peripheral guidance, which may not be able to achieve its objectives without such reform. RIAA has been committed to working with industry and the Government to assess and suggest possible solutions and will continue to do so.
This submission focuses on the impact of the performance test on the proposed principles for the relevant questions. Further details of RIAA’s view of the performance test can be found in its 2024 submission to Government on the above consultation.
‘Download submission’ for responses to all consultation questions.
