The Treasury Laws Amendment (Your Future, Your Super) Act 2021 (the YFYS Act) came into effect on 1 July 2021 and is intended to make the super system better for members.
Under the YFYS Act, the Australian Prudential Regulation Authority (APRA) is required to complete an annual assessment of the net returns of certain superannuation products. This assessment is referred to as the Your Future, Your Super (YFYS) annual performance test.
In the information below you can find answers to some commonly asked questions about the YFYS annual performance test and updates on the changes we are making.
Latest updates (news article) posted 17 December 2021.
The YFYS annual performance test was conducted by comparing the net return performance produced by a superannuation product against the relevant benchmark determined by legislation and calculated by APRA.
The first YFYS annual performance test assessed the past 7-years of net returns as at 30 June 2021. The test was applied to MySuper products, which in our case is the Accumulate Plus Balanced (MySuper) option.
The MySuper products were assessed as having passed or failed the test; the degree to which they passed or failed was not disclosed.
For more information on the YFYS test you can visit the APRA website.
We have received notice from APRA stating that the Balanced (MySuper) option did not pass the requirements of the YFYS annual performance test for the year to 30 June 2021. Other than to notify us of the outcome, APRA has not provided further details of its assessment.
APRA has published details of the index providers used in setting the benchmarks and links to the methodology used for the assessments. For more information on the YFYS test you can visit the APRA website at www.apra.gov.au/your-future-your-super-performance-test – refer to ‘Related documents’ – or visit www.apra.gov.au/superannuation-heatmaps.
The trustee directors and management of the fund acknowledge the concern that this outcome has caused our members and assure you that we take the outcome seriously.
Our approach to investing, which is called our investment philosophy, is to deliver sustainable returns that meet what we set out to achieve and minimise the ups and downs of returns (volatility) over the long term. For more information see our investment philosophy.
Consistent with our approach to deliver smoother returns we have diversified the fund’s investments across asset classes, rather than relying on a smaller range of investments to perform well. Generally, we invest less in shares than many other super funds. Instead, we generally invest more in alternative investments and real assets such as property and infrastructure than many other super funds.
We have not been provided details of the assessment. However, based on the index providers used in the benchmarks as disclosed on the APRA website, we think the result for the Balanced (MySuper) option relates to the under-performance of some of our investments compared to the benchmark used in the YFYS annual performance test and to some of our assets being invested differently to the benchmark.
For example, some of our under-performance has likely been the result of our large investments in retail properties (e.g. shopping centres), while the benchmark used by APRA has a more diversified range of properties which provided higher returns during the period being measured.
In addition, our Balanced (MySuper) option’s diversified investment portfolio includes Multi-Asset and Alternative asset classes which are invested differently to the relevant benchmark used in the YFYS annual performance test.
Our Multi-Asset and Alternative1 asset classes are held to diversify our growth assets rather than relying on a concentrated exposure to share markets.
Our investments in these two asset classes are different and more diverse, and include derivative strategies, commodities, listed real assets, fixed interest and cash. These assets classes hold less shares than the benchmark used in the YFYS annual performance test. Over the assessment period the returns from shares have out-performed the returns from these diversified assets.
For information about the Multi-Assets and Alternative asset class you can read more in our Reference Guide: Investments.
We continually review and make changes to our investment strategies and product offering with a view to improving outcomes for members.
We have introduced alternative credit into the Alternatives asset class with the aim to strengthen returns while still providing diversification. We are continuing to explore opportunities within our property and infrastructure portfolio to realise value-adding changes.
We are well-progressed in planning for new service arrangements that will allow us to enhance our MySuper option, as well as staying focussed on fees that represent value for money.
The Balanced (MySuper) option will be moving from a single option to a lifecycle investment approach. See the following section for more information.
We have planned changes to the Balanced (MySuper) option, moving away from a single option where all members have the same asset allocation and moving to a lifecycle investment approach where members’ asset allocation will change over time.
Younger members, who have a longer timeframe to ride out market ups and downs, will have more growth assets, such as shares, in their investment. To manage the risk of loss as members move closer to retirement, members will have more defensive assets, like fixed interest, in their investment.
As there are currently, there will be other investment options members can choose if they believe a lifecycle option is not suited to their personal circumstances. Members will be able to opt out of the change at any time.
We intend to implement this change in 2022, once new administration arrangements are up and running. More details about the lifecycle option will be sent to members ahead of the change, explaining the option, how it will work and what choices can still be made by members.
You can read more about the lifecycle initiative in our February 2021 newsletter.
If the performance of your super leads you to reconsider how it is invested, please be aware that making a change is an important decision with potentially significant implications. Before making a decision, carefully consider your personal circumstances and the full features of your account with us. You may also wish to consider seeking independent financial advice.
We offer a range of eight investment options for members to choose from. Details about all of our options are included in our Reference Guide: Investments.
To form a more holistic view of a MySuper product’s performance, there are other key areas, beyond net returns, that could be considered. Comprehensive evaluations carried out by industry rating agencies assess not just net returns but also factors such as insurance cover and premiums, education and advice services, fund governance and more. For more information see Industry rating and awards.
Over the same time period as the YFYS annual performance test, our Balanced (MySuper) option has delivered its objectives and produced a smoother return experience for members compared to other MySuper products2. As at 30 June 2021 the Balanced (MySuper) option delivered an annual return of 13%3 and a long term return of 7.3% pa4 over the last 10 years, calculated in each case after the deduction of fees and taxes. This long term return has exceeded our objective, which is 2.5%pa above inflation (CPI) over a 10-year period.
The YFYS annual performance test for the year to 30 June 2021 is an assessment of MySuper product performance. Our MySuper product is the Accumulate Plus Balanced (MySuper) option.
If you are in a Group Super Defined Benefits division or a Retirement Access member, the 30 June 2021 YFYS annual performance test does not apply.