Regulation authority identifies almost 100 underperforming superannuation funds—is yours included?
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In an effort to protect the millions of Australians enrolled in superannuation funds, the Australian Prudential Regulation Authority (APRA) brought in an expanded 'Your Future, Your Super' performance test this year.
This yearly assessment gauges the effectiveness of superannuation funds over the long term by comparing their earnings and fees to specific benchmarks. The ultimate goals of this process are:
In this year's iteration of the test, APRA has expanded its scope to include evaluating 805 trustee-directed products, a subset within the choice sector of superannuation funds.
For those unfamiliar, choice super funds refer to options that are not automatically chosen by the employer (known as MySuper products). Instead, employees select these funds themselves.
Almost 100 superannuation products failed the industry regulator's performance test, and around 75 per cent of the underperforming trustee-directed products are associated with just four trustees:
On the other hand, AMG Super's AMG MySuper stood out as the sole MySuper product out of a total of 64 that did not meet the test benchmarks. This represents an improvement compared to the previous year, which saw five failed products last year and a significant decrease from the 13 failures recorded in 2021.
Regarding trustee-directed products that have not performed successfully, RSE licensees are required to take the following steps:
1. By Thursday, 28 September 2023, send written notifications to members informing them of the results of their performance tests.
2. Understand the factors contributing to these performance test outcomes. Subsequently, create and implement a plan to address and rectify these issues where deemed appropriate.
3. Evaluate the potential consequences that could arise if trustee-directed products, as well as MySuper products, were to fail the performance test. This evaluation should encompass the fund's overall operations and the sustainability of its business activities.
4. Deliberate on whether it would be in the best financial interests of the members to transfer them to an alternative product or fund.
APRA's Deputy Chair, Margaret Cole, has highlighted the remarkable impact of the recently expanded testing framework, a move that 'brought more transparency' across super investment options.
'The annual performance test remains a powerful tool to help APRA hold trustees to account for product performance, fees and costs,' she said.
'Since its introduction in 2021, nine underperforming MySuper products have exited the market, and a total of 800,000 members, with combined assets of $39 billion, have moved to better-performing products.'
To view the complete test results, follow this link.
Members, we urge you to take a look at the results of APRA's performance test. Check if your superannuation product failed and what steps the trustee has taken or is taking to improve your financial safety net.
And if you think that things aren't up to scratch, feel free to speak to a professional financial adviser about switching to a better-performing fund.
We hope you found this article helpful! What are your thoughts on the results? Let us know in the comments!
This yearly assessment gauges the effectiveness of superannuation funds over the long term by comparing their earnings and fees to specific benchmarks. The ultimate goals of this process are:
- to improve the outcomes for fund members; and
- to increase transparency in the industry.
In this year's iteration of the test, APRA has expanded its scope to include evaluating 805 trustee-directed products, a subset within the choice sector of superannuation funds.
For those unfamiliar, choice super funds refer to options that are not automatically chosen by the employer (known as MySuper products). Instead, employees select these funds themselves.
Almost 100 superannuation funds have failed a performance test set by Australia’s industry regulator, which assesses earnings and fees. Credit: Shutterstock.
Almost 100 superannuation products failed the industry regulator's performance test, and around 75 per cent of the underperforming trustee-directed products are associated with just four trustees:
- NM Superannuation Proprietary Limited,
- Nulis Nominees (Australia),
- Oasis Fund Management Limited,
- and OnePath Custodians.
On the other hand, AMG Super's AMG MySuper stood out as the sole MySuper product out of a total of 64 that did not meet the test benchmarks. This represents an improvement compared to the previous year, which saw five failed products last year and a significant decrease from the 13 failures recorded in 2021.
Regarding trustee-directed products that have not performed successfully, RSE licensees are required to take the following steps:
1. By Thursday, 28 September 2023, send written notifications to members informing them of the results of their performance tests.
2. Understand the factors contributing to these performance test outcomes. Subsequently, create and implement a plan to address and rectify these issues where deemed appropriate.
3. Evaluate the potential consequences that could arise if trustee-directed products, as well as MySuper products, were to fail the performance test. This evaluation should encompass the fund's overall operations and the sustainability of its business activities.
4. Deliberate on whether it would be in the best financial interests of the members to transfer them to an alternative product or fund.
APRA's Deputy Chair, Margaret Cole, has highlighted the remarkable impact of the recently expanded testing framework, a move that 'brought more transparency' across super investment options.
'The annual performance test remains a powerful tool to help APRA hold trustees to account for product performance, fees and costs,' she said.
'Since its introduction in 2021, nine underperforming MySuper products have exited the market, and a total of 800,000 members, with combined assets of $39 billion, have moved to better-performing products.'
To view the complete test results, follow this link.
Members, we urge you to take a look at the results of APRA's performance test. Check if your superannuation product failed and what steps the trustee has taken or is taking to improve your financial safety net.
And if you think that things aren't up to scratch, feel free to speak to a professional financial adviser about switching to a better-performing fund.
We hope you found this article helpful! What are your thoughts on the results? Let us know in the comments!
