APRA has put underperforming super funds on notice

APRA has issued a warning to underperforming super funds.

Helen Rowell from APRA has put underperforming super funds on notice

The Australian Prudential Regulation Authority (APRA) has put underperforming super funds on notice, saying it will investigate the worst funds and bring them into line.

The top 10 MySuper funds, which delivered an average annual return of 8.9 per cent over the last two and a half years (to December 2016), have regularly outperformed the bottom 10, which only returned an average of 5.4 per cent annually.

Speaking at the annual Conference of Major Superannuation Funds on Friday, APRA deputy chair Helen Rowell issued a warning to underperforming funds.

“The bottom performers we look at pretty closely and we are going to be having conversations with them,” said Ms Rowell.

“Operating in what is an increasingly complex environment, trustees need to be aware of and proactively considering how they will respond to the challenges that will arise, now and into the future, to ensure their funds remain 'fit for purpose'.

“That means having the scale, capacity and resources to deliver on their obligations to members on an ongoing basis, which requires sound planning, taking into account a range of plausible scenarios, disciplined monitoring of progress against those plans, and taking prompt corrective action when underperformance is identified. Not all trustees are doing this adequately.”

While APRA has not declared exactly which funds it will investigate, it is believed that some of them may be not-for-profit funds.

Ms Rowell has also reproached some funds for “laxity of governance and oversight” and for spending on “questionable expenditure”, such as overseas trips for board members or paying for spouses to attend conferences.

“I always raise an eyebrow at the need for the full board, for example, to travel internationally to talk to investment experts, given the frequency with which investment experts come down here, and whether it's actually the full board that needs to go,” said Ms Rowell.

She said this inappropriate spending could have a negative effect on members’ funds over time.

Read more at APRA

How is your super fund performing? Do you expect it will be targetted by APRA and, if it is, would you expect the performance to improve?

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    COMMENTS

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    29th Mar 2017
    11:18am
    Have a self managed fund and if you under perform only one person you can blame and thats you
    LiveItUp
    29th Mar 2017
    12:53pm
    SMSF controlled by ATO not APRA. Mine regularly beats that average by quite a bit.
    Happily retired early
    29th Mar 2017
    11:38am
    I'm in an industry super fund and very happy with returns so far given the world financial situation. Apparently Turnbull wants to give the industry funds to the banks to manage
    NO THANK YOU they are ripping us all off enough already!!!
    LiveItUp
    29th Mar 2017
    12:55pm
    I'd not be happy with 8.9% in the current markets.
    buby
    3rd May 2017
    1:13pm
    geez thats not bad Bonny, Whose your fund :)?
    buby
    3rd May 2017
    1:13pm
    geez thats not bad Bonny, Whose your fund :)?
    johnp
    29th Mar 2017
    1:38pm
    Unless Im wrong, from what I have been able to see the Industry funds generally have performed best. So for the public generally it is important that banks (and others) do not get their grubby hands on them. Sour grapes from me and doesnt help me cos Im not in an industry fund these days
    john
    29th Mar 2017
    3:53pm
    In this capitalist world we live in , I guess the stock market is the only way we have , to get moving and make money. Actually the stock market invented I guess by Rothchilds and other wealthy people who figured out how to " consume" money off people 200 to 300 hundreds years past to invest and make a fortune. I don't know, but, I guess in those times investment meant put your money into an actual steel COMPANY, say, not a bet on that company whether it would succeed or not.. But now the stock exchange is a giant TAB, its like putting your whole life in a giant Russian Roulette wheel of fortune? What a risk, but the capitalists breed on it and bleed of it.
    I don't know or understand it that well.
    But lets say you buy a share , are you actually buying a share that sends your money as an investment to the very company that you bought the share for.
    Or are you going into a gambling ring , where, all your doing, is betting on the chance , not the company , but the chance the company will improve.
    If you spend 100 dollars and the gamble is a 10 dollar win , you sell your share for 110 dollars, you've made a profit, has the company made the profit with your hundred helping it, or have you just gambled on that company and its chances.
    If that's the case the share market is the racket of all rackets, and having watched a movie about the GFC I find myself baffled as to how people can even be allowed to take bets that there is going to be a terrible financial disaster.
    I also wonder how in hell , that people giving loans to anyone , can sell off the right to collect those loans to another collector, who pays the original loan bank , money for the right to collect , then finds that what they've bought is useless because these greedy dogs , loaned anything to anyone and passed them on to, well, just a new collector who thought they would make a killing even though spending a bit to get the original lender to hand the right of collection including interest over. The secondary collector buyer of debts, didn't know at the time that this was going to burst, like a sewer overflowing.
    The jargon I couldn't understand in the movie, and the cheating lying greed and the stock market almost turning on itself like a shark when another shark has half its guts hanging out. So it goes in to feed on one of its own.
    The worst of that movie was the fact that barely any soul, a very foul greedy cheating souls by the way, never got punished and went along the road and are still mainly billionaires. They actually should be jailed. This movie was a semi doco on GFC .
    If capitalism survives on wealth being determined by a gambling house , then the rules need sharpening, but it appears they haven't. Amazing.
    Anonymous
    29th Mar 2017
    4:44pm
    With the stock market John you actually sell or buy shares from another person or entity if you like so you are betting that if you buy the share from A for$1 you will be able to sell it to person B for perhaps $2 and make a profit of $1 and this is all done through a stock broker who takes a small fee or commission if you like.
    The only time a company receives any money is generally when they commence and offer shares to people or entities at generally a set price. This is a somewhat simplistic summary but I hope you understand.
    Keep in mind the stock market is generally run by supply and demand so that if there is low supply the price should go up and hence a profit and if there is no demand the price should go down.
    Janran
    29th Mar 2017
    7:43pm
    As if that's not bad enough, John, then there's the "Futures" stock market, which is betting on what might happen in future markets. It is sheer madness, because all this money invested is not producing any products - it IS simply betting. All is achieves is to grease the palms of the financial wheelers and dealers.
    And the possibility and probability that it is rife with insider trading knowledge, makes a sham of our whole financial system - Capitalism. Over the long term, the only losers are the little people who are forced to sell their shares when the markets crash or trough, which they are destined to do eventually. Those with plenty of assets and money can ride out the wave, then buy up the shares sold at dirt cheap prices by the little people, then reap the benefits when the markets pick up again.
    The redistribution of wealth ha ha. The rich get richer, over and over again. No jail time for these leaners.
    floss
    29th Mar 2017
    4:12pm
    Would I trust a bank with my super not on your life . A Industry Fund I use and trust. For Gods sake Tumbull have you not all ready stuffed our retirement.
    LiveItUp
    29th Mar 2017
    8:29pm
    I would not have super in anything but a SMSF. i have had dealings with 2 industry funds in the last month and after that I wouldn't put my money anywhere near them. I couldn't believe the hoops one had to jump through to condolidation their own super. So much easier with a SMSF where I have control over my money.
    buby
    1st Apr 2017
    7:30pm
    i actually not trusted the Super Industry funds, cause once leaving the job, i found my money dwindled year after year. and so i decided to take it all out before it was totally gobled UP, and trusted it to the banks, but watched it like a hawk, and its been more beneficial for me, as when i needed it for an emergency, i drew out what i needed, and then replaced it as soon as i could, then gone forward again. This couldn't be done with the super funds. As when your all in, you can't draw out if you need for something, then replace. and you always losing to the funds who were regulating where your money went.
    I'm happier now thanks. Even tho i don't work, unfortunately. I think i saved something by my actions
    buby
    3rd May 2017
    1:23pm
    Mind you tho, this year especially its been a lot harder to replace what i took out, and one bank in particular was just ripping into me. So i won't be saving too much with the Wstpc, they suck big time!
    Mrs Hedgehog
    29th Mar 2017
    5:34pm
    Mine manages to make a reasonable amount of interest, but then take the lot plus a bit in what it calls management costs, so effectively I don't get any interest at all. These costs are not considered to be fees, they are just a greedy grap at as much as they can leagelly take.
    buby
    3rd May 2017
    1:26pm
    Yes mrs, i think some call it management costs, so sometimes you might wonder why bother putting your money in. if you get interest, then they suck it right back out again and call it management costs. YOU've made nothing. I call that very shifty, and they call it legal.
    Its not a good thing if they do that. I would change something there.
    Perhaps you could move it to another that gives you better odds Mrs,. !!