APRA publishes new frequently asked questions on Your Future, Your Super performance test

Following the new superannuation rules that came into effect this week, including so-called “stapling” of super funds so employees retain the same one when they move jobs, APRA has released the new frequently asked questions sheet.

The frequently asked questions provide guidance to registrable superannuation entity (RSE) licensees on the measures included in the government’s Your Future, Your Super (YFYS) reform package, announced in the 2020-21 budget. The Treasury Laws Amendment (Your Future, Your Super) Act 2021 (YFYS Act) came into effect on 1 July 2021.

The performance test applies from 1 July 2021 to MySuper products, and from 1 July 2022 to trustee-directed products. The assessment under the performance test, in conjunction with the ATO’s YourSuper comparison tool, is intended to hold RSE licensees to account for underperformance through greater transparency and increased consequences. Where a product fails the performance test in two consecutive years, the RSE licensee will be prohibited from accepting new beneficiaries into that product.

These frequently asked questions provide general and technical guidance to RSE licensees on the annual performance test.

Trustee-directed products

1. Are investment options held through platform structures classified as trustee-directed products (TDPs)? 
2. If an investment option is a TDP under one RSE licensee, will it be deemed to be a TDP if offered by other RSE licensees? 
3. If a TDP fails the performance test under one RSE licensee, will it be deemed to have failed the performance test when offered by other RSE licensee?
4. Can a managed investment scheme, held through a connected entity, be classified as a TDP?
5. Can investment options that have no strategic asset allocation benchmarks be classified as TDPs?
6. What reporting forms will be used for the 2022 performance test?
7. When will RSE licensees be notified of their 2022 performance test results and what detail will be included?

General

1. When will APRA notify RSE licensees of their MySuper product’s performance test result?
2. Will APRA publish the results of the performance test? 
3. Can an RSE licensee request that its result is not published by APRA?
4. Are RSE licensees required to notify beneficiaries of their performance test result?
5. Can an RSE licensee be exempted from providing notice to beneficiaries if it is in the process of transferring its beneficiaries to another product or fund?
6. Can an RSE licensee apply for an extension to the 28-day time frame for providing notice to beneficiaries?
7. Do RSE licensees need to send the notice to members who are in the MySuper product at the date of the notice or at the date the performance test was conducted?
8. Are RSE licensees required to consider their performance test result in their annual outcomes assessment(s) under section 52(9) of the SIS Act?
9. Will APRA publish the performance test values for each MySuper product? (NEW)
10. What was the benchmark representative administration fees and expenses (RAFE) used for the 2020-21 performance test (MySuper)? (NEW)

Technical

1. APRA has been given flexibility under the regulations to combine the performance of two or more products for the purpose of the performance test. How does APRA intend to use that flexibility? 
2. How will a product be assessed when there has been a significant change in the structure of the product over time, for example changing from a single strategy to a life-cycle strategy?
3. What administration fees are assessed in the performance test?
4. What performance history is assessed under the test? If a MySuper product has less than five years’ history, will it be assessed?
5. Which data items from APRA’s reporting forms are used to calculate a product’s performance test result?