Performance test coverage must protect all Australians from Shield and First Guardian style collapses

Super Members Council

The Super Members Council welcomes the Government’s consultation paper to strengthen the superannuation performance test, urging it to expand test coverage to include all platform products so that every Australian with super has the same strong protections and performance transparency. 

The Council supports a strong, system‑wide performance test as a critical consumer protection and warns major gaps in current test coverage are leaving millions of Australians exposed to underperformance.

“The fact that tens of thousands of Australians have been exposed to products like the collapsed Shield and First Guardian schemes — which weren’t subject to the performance test despite being able to receive compulsory super contributions — shows why closing these gaps is both urgent and essential,” says Super Members Council CEO Misha Schubert.

Currently, around 41% of assets in APRA-regulated super funds are not covered by the test, creating a gaping safety hole in the safeguards and transparency for millions of Australians.

Test coverage is heavily skewed, with many of the current exclusions leaving consumers in untested savings-phase products — many of them on newer super platforms – flying blind on whether their super is performing for them or not.

These current gaps leave some members without clear, comparable performance information depending on where and how they invest their retirement savings – when every Australian deserves strong minimum standards of safety and transparency on the performance of their super.

The Council has also highlighted the need to strengthen the integrity of the test by fixing fee gaming risks.

Under the current settings, administration fees are assessed over the most recent 12 months, compared to a 10‑year horizon for investment performance, opening the door to tactical gaming that can mask the fact that a super product is delivering poor returns.

“Right now, you’ve got millions of consumers who are essentially flying blind, not knowing whether their super is meeting the performance benchmark that applies across the rest of the system,” added Ms. Schubert.

“That’s a giant hole in consumer safety — where your retirement savings are invested shouldn’t determine whether or not you’re protected by basic performance checks.”

The paper also proposes two options for changes to the test’s design including how it should apply in emerging asset classes such as venture capital and early-stage private equity.