Strengthening the Superannuation Performance Test

Abstract

The submission draws on University of Sydney expertise in superannuation, benchmark design, climate-related financial risk, digital investment infrastructure and retirement outcomes, and recommends reforms that support member protection while avoiding unintended barriers to long-term, diversified, climate-aligned and productivity-enhancing investment. This submission supports retaining the annual superannuation performance test as an important member-protection mechanism, while refining its design to reduce unintended investment constraints, benchmark hugging, and uneven product coverage. It recommends a staged reform pathway that includes improving the existing benchmark framework, introducing a tightly governed pathway for emerging assets, refining the Alternatives covered asset class, establishing a routine benchmark review process, and shadow-testing any risk-adjusted reference portfolio before replacing the current framework. The submission also recommends that any expansion of the test proceed cautiously and only where a fair product-level benchmark can be constructed, particularly for externally directed accumulation products, single-sector products, and retirement products. Overall, the submission argues that the performance test should continue to protect members from persistent underperformance while avoiding unintended barriers to long-term, diversified, climate-aligned, and productivity-enhancing investment.