Superannuation funds call for Your Future, Your Super reforms to be refined

Superannuation funds are calling on the incoming federal government to refine the controversial Your Future, Your Super reforms.

Kristian Fok, Cbus chief investment officer. Picture: Britta Campion

Superannuation funds are calling on the incoming federal government to refine controversial Your Future, Your Super reforms that came into effect less than a year ago, arguing the current model’s performance test is a “blunt and retrospective” instrument that adds further complexity to investment decision-making.

Speaking at an Australian Superannuation Funds Australia conference on Wednesday, Cbus chief investment officer Kristian Fok and AMP Wealth Management chief investment officer Anna Shelley both cited the need for adjustments to the legislation.

“I’d hope there’s an opportunity for government to refine it a bit,” Mr Fok, who manages $75bn in assets under management for Cbus, said.

“I don’t think there would be wholesale changes, but I think there might be some improvements … it’s about getting those improvements in before there’s too many unexpected consequences,” Ms Shelley added.

Describing the performance test as “a blunt and retrospective measurement that nobody knew they had back in 2014”, Ms Shelley, who manages more than $100bn in assets at AMP, said the government’s tool added another layer of complexity for the industry.

“It‘s a hurdle that you have to meet and it’s existential for everyone. So then what it then comes down to is the headroom you’ve got versus that test. And that’s different, obviously, for different options.

“If you’ve got barely any headroom then you’ve got one objective, which is to beat that performance test benchmark. But if you’ve got plenty of headroom then you’ve got the space and time to focus on that, as well as the most important objective, which is the member outcome.”

On the investing outlook, Mr Fok warned super funds were going to have to work “a lot harder” to get adequate returns for members as inflation and rates push higher.

“You’ve got to work a lot harder on your assets to either make them fit for purpose in the environment going forward, or potentially, when everyone’s running away from an asset, that’s when you want to actually buy. In our case, we were buying retail when people were selling.”

Asked his thoughts on Australian start-up Canva, which this week took a big hit to its valuation as one of its investors slashed the value of its shares by a third, Mr Fok said he still wouldn’t buy into the company.

“If I could buy it way, way back then I probably would. But not now,” he told the audience.