AMP is supportive of the intent of the Your Future, Your Super performance test and the extension to Choice products that are comparable to MySuper products.
However, AMP is not supportive of the proposed extension of the test to superannuation wrap products, which, if applied in its current form would result in significant consumer confusion and harm for many Australians who have made an active decision about how to invest their retirement savings.
Applying a ‘one size fits all’ testing methodology to the broad range of superannuation wrap investment options, designed and chosen for their unique characteristics and performance objectives, undermines the ability for consumers to implement their desired investment strategies. These products, which rightly have existing strict disclosure and reporting requirements, help many Australians achieve optimal financial outcomes in retirement.
The test fails to consider risk, forward-looking qualitative analysis and tax benefits which are relevant and important factors considered when deciding to invest in a superannuation wrap product. It also fails to recognise the important role of advisers who help consumers make decisions about whether to invest in these products and who themselves are subject to stringent best interest duty requirements.
Additionally, for many wrap products the test would not be completed based on the actual fees charged or actual net returns received by the member holding the product. It would also be based on new reporting by super funds that has not yet been subject to audit and quality assurance. There is a real risk the performance test results will be wrong.
In the interest of consumers, it is vitally important the Government and APRA removes wrap products from the Choice performance test until an improved and more accurate test is developed.