A debate is unfolding over the efficacy of superannuation performance tests.

Big superannuation funds have been accused of employing “untrue gripes” to soften stringent performance evaluations that safeguard consumers from poor returns and exorbitant fees. 

This controversy has been detailed by Karen Chester, former chairwoman of the Australian Securities and Investments Commission, and Brad Ruting, senior manager at Impact Economics and Policy, in a new opinion piece. 

The pair claim that the super industry's campaign to dilute the tests is founded on myths rather than facts.

The crux of the dispute centres around the performance tests introduced as part of the Coalition's Your Future, Your Super reforms, based on findings from the Productivity Commission's 2018 inquiry into superannuation. 

The tests are designed to measure funds against a composite benchmark over a decade, rewarding those that offer solid long-term returns. 

Despite this, funds claim the tests promote short-term investment strategies and deter from green energy investments and other national projects.

The Albanese government, having previously amended the test in response to initial concerns, announced a potential overhaul after industry leaders voiced apprehensions about the test stifling investment in nation-building ventures. 

However, Chester and Ruting argue that these claims are unfounded, noting the absence of concrete evidence linking the performance test to a deterrence of beneficial investments. However, they agree that the test, while far from perfect, stands as a crucial tool in ensuring super trustees act in the best interest of their members over the long term.

Since the implementation of the performance tests in 2021, underperforming MySuper products have been phased out, redirecting a reported 1.4 million customers with $75.5 billion in savings to better-performing funds. 

Chester and Ruting maintain that the test has largely succeeded in its goal, despite opposition from nearly all major funds seeking reform. 

The sole outlier, construction industry fund Cbus, contends that the current regime, though not flawless, effectively weeds out underperformers.

In light of the ongoing review by Treasury, Chester and Ruting urge for a reality check, calling for a robust, fact-based evaluation of the performance test's impact on superannuation outcomes.