Your Future, Your Super: QIC's response to proposed performance benchmarking mechanisms

QIC strongly supports the primary purpose of the Your Future, Your Super reforms which aim to improve the accountability, transparency and performance of the nation’s superannuation funds. We also acknowledge and welcome the level of engagement undertaken during the drafting of the proposed reforms.

Furthermore, we note our original concerns relating to a proposed annual performance test – which would have compared superannuation trustees’ unlisted funds’ returns to passive listed indices – have been largely redressed in the current draft. However, we continue to believe the fixed income indices are inappropriate for floating rate or low duration portfolios.

We view the inclusion of the new unlisted benchmarks for real estate and infrastructure as favourable as it removes the bias to compare unlisted assets to an equity beta and in the case of infrastructure, to an inappropriate sector and geographic benchmark.

We recognise a key driver of the Government’s benchmark choice is simplification but we continue to believe some degree of risk measurement would be ideal: without this, superannuation trustees are potentially incentivised to “risk up” asset class allocations, potentially putting member returns at risk.