The chief executive of Australia’s largest superannuation fund, Paul Schroder, expressed openness to modifying performance tests for underperforming funds. Speaking at the National Press Club in Canberra on Wednesday, he emphasized the importance of maintaining benchmarks for returns while considering enhancements to protect members’ interests.
Schroder stated, “It’s really important to protect members’ interests and for members to have confidence that the funds they’re in are performing well.” He underscored the necessity of a performance test and expressed a willingness to explore improvements. His comments come amid increasing calls to adjust the tests to better support investments in housing and green technology.
The performance test was introduced four years ago based on recommendations from the Productivity Commission. Funds that do not meet the required benchmarks must inform their members of poor performance. Should a fund fail the test for a second consecutive year, it is prohibited from acquiring new clients.
During a recent economic roundtable led by Treasurer Jim Chalmers, participants urged for revisions to the existing performance tests. Schroder provided insights into AustralianSuper’s projected growth, predicting that by 2030, its investments in Australia could exceed $250 billion, approximately nine percent of the nation’s projected gross domestic product.
He articulated a broader perspective on the role of superannuation funds, stating, “We must break the piggy bank mentality. Super is not a trillion-dollar fix-all. It cannot and should not be used to solve every complex national problem.”
Schroder highlighted the potential of super funds to drive Australia’s long-term prosperity, suggesting that this potential remains largely untapped. He cautioned against government overreach in dictating investment strategies, asserting, “It would be a disaster for members if governments tried to tell us what to invest in.”
As the overseer of AustralianSuper’s 3.6 million members, Schroder emphasized the need for open dialogue about balancing investment risks while pursuing ventures that provide meaningful returns. He noted that the government’s role in shaping the country’s direction should complement the mission of super funds to make productive investments that enhance members’ retirement savings.
The discussion reflects ongoing concerns surrounding the efficacy of performance tests and the future direction of superannuation funds in Australia. As stakeholders consider potential adjustments, the focus remains on ensuring that member interests are prioritized while fostering sustainable economic growth.
