YFYS

While APRA “doesn’t feel the need to start each year with a shiny new set of initiatives”, it’s still planning on scrutinising super funds’ valuation practices and giving more “sub-scale” funds the nudge to merge in 2023.

“We had the courage to stick with our investment strategies,” ACS CIO Michael Block tells ISN. “Often what happens with a strategy that doesn’t work is you cut and run at the wrong time. We were lucky enough or clever enough or brave enough that that didn’t happen, and our members reaped the benefit this year.”

The superannuation industry is grappling with the complexity of delivering retirement solutions. Perhaps the only way to assess how well they work in the future is to start assessing them right now.

Vanguard is living up to its name, with the launch of its superannuation product likely heralding a new age of high intensity fee competition. Managing director Daniel Shrimski says the index giant is willing to play “the long game” to become a major player in the market.

New research confirms the “anecdotal concerns” of the superannuation industry that the current design of the Your Future Your Super test makes responsible investing a no-go zone.

The CEO of AustralianSuper says the Morrison Government doesn’t get enough credit for introducing the YFYS reforms, and that funds need to stop arguing over its detail and get on with the business of performing against the benchmarks.

Adding a qualitative measure of performance or the right to appeal to YFYS could enhance consumer outcomes. But critics have warned that it could defang the test.

The Grattan Institute says that “maintaining the integrity” of the performance test is vital and that the review should seek to make incremental improvements rather than wholesale reforms.

Passing the performance test is no excuse for not merging, according to APRA, and the prudential regulator will still be giving small funds the nudge to consolidate where they feel their size isn’t sustainable.

A new review will address some of the unintended consequences of Your Future Your Super. But while super funds are no doubt holding out for a hero, there’s probably no perfect performance test.