Almost one million members in dud super funds, says APRA

Font Size:

The Australian Prudential Regulation Authority (APRA) has put the superannuation industry on notice.

Speaking after the release of its annual super Heatmap appraisal, APRA deputy chair Helen Rowell said Australian superannuation was a good system but had “room to improve”.

Since December 2019, 11 of the 47 MySuper products that underperformed on APRA’s investment benchmarks have left the industry. And the regulator has warned that eight trustees who have failed their obligations to members could face “formal enforcement powers”.

Ms Rowell described the superannuation system as “… performing pretty well, delivering pretty good outcomes. But it is a bit high cost, investment performance is mixed across the board and there are scale and sustainability issues to be tackled.”

“In particular, we are concerned that some funds identified as the poorest performers 12 months ago remain in that position today,” she said.

“Overall, we estimate that 900,000 members (representing $31 billion in total assets at 30 June 2020) are invested in the six MySuper products with significant investment underperformance,” she said. 

Ms Rowell believes the “name and shame” heatmap has been effective. 

“The MySuper product heatmap shines a light on those trustees who are failing their members by charging high fees and not delivering good long-run returns,” she said.

“The impact has been immediate in the area of fees and costs, with MySuper members saving hundreds of millions of dollars in fees since the release of the first heatmap. And despite an immensely challenging year with COVID-19, more than half of MySuper products exceeded our investment benchmarks over six years.”

Ms Rowell said more than half the products (37) assessed were performing at or above the heatmap investing benchmarks over six years, and under 40 per cent (27) were underperforming by up to 75 basis points, and 9 per cent (six) underperformed by more than 75 basis points. 

In the 12 months since the first heatmap was published:

  • 11 of the MySuper products that underperformed the investment benchmarks have left the industry
  • 71 per cent of MySuper members (10 million members) are paying less in total fees and costs
  • an estimated $408m saving in total fees and costs has been achieved.

“Of the eight MySuper products with significantly high total fees and costs in the 2019 heatmap, eight have reduced their total fees and costs by an average of $166 annually and two have exited the industry,” Ms Rowell told The New Daily.

She said some trustees were “clearly modifying” investment decisions to manage their performance against the heatmap. 

“Others have tried to rewrite history by resubmitting data to present their funds in a more favourable light. These kinds of games indicate poor leadership, are not indicative of a mindset that is genuinely seeking the best outcomes for members and certainly won’t get those trustees off APRA’s underperformer list,” she said. 

“Products with higher fees are not necessarily delivering higher performance … In terms of what might happen to the structure of fees it’s a challenging issue. There’s no right structure for fees.  

“We want to put the challenge back to the industry to think about if they have that level of structure right and what they can do to make sure they’re being equitable in the way they distribute fees across their members.”

Have you checked to ensure your fund is performing well? 


Superannuation survey reveals need for new digital tools

Super funds need to offer more when it comes to retirement planning, survey finds.

Vaccine approvals provide a big boost for super in November

Increasing confidence that we are over the worst of the pandemic is good news for super.

Controversial measure sees $36 billion 'sucked' from superannuation

More than 3 million Australians dug into super to dig themselves out of a COVID hole.

Written by Will Brodie


Sign-up to the YourLifeChoices Enewsletter

continue reading


Podcast: Banishing winter blues with cold water companionship

COVID lockdowns can do funny things to people, but last year Melburnian Belle Galloway decided to do something she had...


Soothe your soul with these stunning images of Japan's cherry blossoms

It's sakura season, the perfect opportunity for locals to indulge in hanami, the traditional Japanese custom of 'flower viewing'. On...


Discover New Zealand's best winter attractions

To mark the start of the trans-Tasman bubble, here are some of the best things to do in New Zealand...


Check your passport's expiry date before booking

International travel seems to be slowly but surely returning. With the trans-Tasman bubble and talks of another bubble opening with...


Tips for getting a good night's sleep on holiday

Travel can seriously mess with our sleep. The jet lag that disrupts our body clocks may be the most obvious...


Tasmania's top spots for shopping and markets

The Margate Train offers shopping with a difference at Margate, southern Tasmania. Margate is 20 minutes south of Hobart (19km)...


What will it take for travel to get restarted again?

Maraid is encouraged by the travel bubble with New Zealand opening up and wonders what needs to happen before we...


The unbelievable software flaw that led to a major flight incident

When it comes to flight engineering, you would hope that every possibility has been factored in to perfection, but a...