Jim Chalmers: Superannuation test shake-up could unlock riskier investments and protect more retirees

Treasurer Jim Chalmers insists superannuation funds will not be let off the hook from their duty to members as Labor considers changing the annual performance test to unlock investment in riskier assets while covering more retirement products.

The Federal Government has opened consultation on changes to the test, which was introduced in 2021 to weed out underperforming super products and protect Australians from poor returns and high fees.

The test has been praised for forcing dud funds to lift their game or leave the market. But it has also become a bugbear for parts of the $4.5 trillion super industry, which argues the rules can discourage funds from backing assets that may take longer to pay off.

That includes venture capital, renewable energy, affordable housing and other emerging investments where returns can be riskier and harder to compare against standard benchmarks.

“What we have heard from the sector, what we have heard from investors in the economy more broadly, is that the test as it’s currently written unintentionally deters and discourages investment in those areas,” Dr Chalmers said.

“We have absolutely no intention of directing superannuation investment... (or) messing with the superannuation fund’s primary responsibility to members to get the best return that they can.”

The super industry welcomed the consultation, saying the test should remain but be dragged into the modern era.

Association of Superannuation Funds of Australia chief executive Mary Delahunty said the performance test had done its job, but needed to be updated five years after it was introduced.

“It’s crucial that in a compulsory system, we have a measure of performance,” Ms Delahunty said.

ASFA said the current test had helped push underperforming funds out of the market, but could make some investments look worse than they really were in a long-term super context.

Ms Delahunty said changes could give funds more room to invest in emerging assets that are poorly covered by current benchmarks, including energy, defence, agriculture and early-stage Australian venture capital.

Super Consumers Australia welcomed the Government’s proposal to extend the performance test to retirement products and platform investments, saying too many Australians still fall through the cracks.

“Right now, a member can move from an accumulation product into an almost identical retirement product and lose the protection of the performance test,” chief executive Xavier O’Halloran said.

“That gap does not make sense. Retirees should have the same safeguards and transparency as everyone else in the super system.”

The consumer group said platform funds are another weak spot.

These products let super members choose from large menus of investments, but many sit outside the performance test that applies to standard super products.

Super Consumers Australia said only 4.6 per cent of platform investments, or $19.9 billion of $433.3b, were covered by the performance test in 2025. It said 11 platform funds managing more than $190b had no products assessed under the test, including Hub24 and Netwealth.

“Australians should not face weaker protections simply because of the type of super fund they are in,” Mr O’Halloran said.

Treasury said the proposals have not been approved by Government and are designed to guide consultation on how the performance test should adapt as the super system grows larger and more complex.