Five super funds fail performance test

five super funds fail performance test

Testing by the finance sector watchdog reveals five superannuation funds where you should not have your money.

The Australian Prudential Regulation Authority (APRA) has released the results of the second annual MySuper performance test and given five funds a ‘fail’.

APRA started the testing in 2021 and the results published last year revealed that 13 of the 80 products tested had failed to meet the performance criteria. While the 2022 figure of five marks an apparent improvement, this year’s tests looked at 69 products, 11 fewer than last year.

Of the five failing products, four are ‘repeat offenders’, having also failed to make the grade last year. They are Australian Catholic Superannuation and Retirement Fund Lifetime One; Retirement Wrap BT Super MySuper; Energy Industries Superannuation Scheme’s Balanced (MySuper), and AMG MySuper.

Read: Too many retirees miss out on valuable super fund benefit

As failures for a second consecutive year, those four are now banned from taking on any new members. The fifth failing product, Retirement Wrap’s Westpac Group Plan MySuper – a small corporate fund for Westpac staff – is on the list for the first time and can still take on new members.

The five failing products represent 603,000 members and $27.8 billion in assets. APRA rules dictate that all five must advise their members this month that they are in underperforming products and recommend they move their money elsewhere.

APRA member Margaret Cole said the performance tests were driving better results for members by encouraging funds to cut fees. As a result, 38 per cent of people in MySuper products were paying lower fees than last year, she said.

Read: Super funds post positive returns in July

“This is the culmination of APRA’s intensified supervisory approach, driving trustees to take meaningful action to improve member outcomes. APRA encourages superannuation trustees to continue to explore ways to improve the efficiency of their MySuper products,” Ms Cole said.

The MySuper Performance Test applies a series of benchmarks to the products, and any fund that underperforms by more than 0.5 percentage points is deemed to have failed.

As a result of the failures, several underperforming funds have announced merger plans. BT MySuper fund, by far the largest of the failing funds with $21.1 billion in assets, has announced an intention to merge with Mercer Super.

A BT spokesperson said: “We have worked hard to improve member outcomes, including reducing fees, and the outcome was mainly due to some periods of underperformance, particularly in the 2014–15 financial year and in last year’s turbulent global markets.”

Read: Victims of crime call for superannuation loophole to be closed

The spokesperson added that the merger could help members through lower fees and a wider range of investment choices.

Of the other failing funds, Australian Catholic Superannuation is to merge with UniSuper, while the Energy Industries Superannuation Scheme is planning a merger with CBus.

Shifting the focus to the more positive aspects of the report, Ms Cole said: “Pleasingly, almost 96 per cent of MySuper superannuation members are now in a performing MySuper product, equating to 13.1 million member accounts.”

Based on 10-year returns to June this year, the top 10 balanced super funds currently include Australian Super, VicSuper and Hostplus among others.

The full details of this year’s test outcomes and results are available via APRA’s website.

How has your super fund performed this year? Is it one of the five underperformers on the list? Why not share your experience and thoughts in the comments section below?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Written by Andrew Gigacz

Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.

Leave a Reply

bag of groceries

Another iconic Australian label sold overseas

woman placing voting form in ballot box

Time to get serious about preventing pork-barrelling