It is mathematically certain, according to Labor’s shadow assistant treasurer, Stephen Jones, that the Your Future, Your Super (YFYS) benchmarking test will fail every superannuation fund at some point over a 10 year period.
Speaking at the Brighter Future for Members webinar hosted by Industry Super Australia (ISA), Jones said if a Labor Government was elected, he would let the YFYS system run for a while and review how it was operating to ensure it did not create unintended consequences.
“It might mean that some of the benchmarks need tweaking here and there but again, to the message of stability and certainty, we will make no sudden changes and we believe that quiet benchmarking has a role to play,” Jones said.
Jones said he had given 100% support to performance benchmarking for super funds but that where his party departed from the Government was in how it was done and through what metrics.
But the current benchmarking metrics were delivering “some pretty rough justice”, Jones said.
“It’s cleaning up performance, there’s no doubt about that, and that’s a good thing.
“My concern is if you let it run for 10 years, it’s almost mathematically certain that every fund in Australia will fail.”
Jones said he wanted to look into the operation of the YFYS’ reversal of the onus of proof to the trustee for the best financial interests duty.
“Let's ensure that it doesn't create the sort of unintended consequence and red tape that I'm sure weren't intended by the government but may or may be the result of those legislative changes,” he said.
Senator Jane Hume, minister for superannuation, financial services, and the digital economy, said there had been significant improvements made by the Government in super.
“That’s what my great frustration is… everything that we have done has always had members first and foremost in mind and yet both the opposition, and the industry, has pushed against every single one of them,” Hume said.
“I think that we’ve worked around it really well as a government and in fact, because we’ve had problems with the peak bodies and the ISA isn’t the only one… we just simply go straight to the chairs and the CEOs of the superannuation funds.
“Most of them are actually on board with the changes that we’re putting in place.”