Super fund giant open to performance test tweaks

The head of Australia’s largest super organisation says he’s open to improvements to performance tests for underperforming funds.

AustralianSuper chief executive Paul Schroder said it was “utterly important” for benchmarks on returns to remain, but was receptive to suggestions to bolster protections.

“It’s really important to protect members’ interests and for members to have confidence that the funds they’re in are performing well,” he told the National Press Club in Canberra on Wednesday.

“There should be a performance test and we’re open to it improving.”

Calls are growing for the performance tests to be tweaked to encourage financing of housing and green technology.

The performance test was recommended by the Productivity Commission to out underperforming funds and cut fees, and became effective four years ago.

Failing the test means a fund must notify members of its poor performance and, if it falls short for a second consecutive year, it will be banned from signing new clients.

Participants at Treasurer Jim Chalmers’ economic roundtable in August urged for changes to be made to the test.

Mr Schroder said forecasts showed that by 2030, AustralianSuper’s investments in Australia might exceed $250 billion, or about nine per cent of the nation’s projected gross domestic product.

He said part of a government’s role was to build things that were important for the nation but won’t make the financial returns super funds need.

“We must break the piggy bank mentality,” Mr Schroder said.

“Super is not a trillion-dollar fix-all.

“It cannot and should not be used to solve every complex national problem.”

He said the potential for super funds to be an “engine room of Australia’s sustained prosperity is unrealised”.

“I’ve said this behind closed doors and in front of the cameras and I’ll say it again, it would be a disaster for members if governments tried to tell us what to invest in,” Mr Schroder said.

Overseeing the fund for its 3.6 million members, he said the solution required open dialogue about how to better balance risks and make projects worth investing in.

Mr Schroder said the government’s job of determining the direction of the country and its needs should be “mutually reinforcing” with the job of super funds to make productive investments to boost their members’ retirement savings.

Tess Ikonomou
(Australian Associated Press)