The financial regulator has revealed that five superannuation funds have failed their annual performance test.
Key points:
- Five super products have failed APRA’s test
- Four will be closed to new members after failing a second time
- APRA tested 69 default MySuper products
The Australian Prudential and Regulatory Authority (APRA) tested 69 default MySuper products against criteria of investment performance, fees and costs.
Westpac Group’s Retirement Wrap, which has 44,000 members and assets worth $3.2 billion, failed the test for the first time.
Four products failed a second time, meaning they will now be closed to new members:
- BT Super Retirement Wrap (BT is owned by Westpac)
- AMG Super, MySuper
- Retirement plan of the energy industries – Group A
- Australian Catholic Superannuation and Superannuation Fund, LifetimeOne
The four funds are sizable, with more than half a million members between them and assets worth nearly $25 billion.
An EISS spokesman said it will soon merge with Cbus Super.
“[This] will provide our members with access to greater economies of scale and investment opportunities,” they said.
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A BT spokesman said it was disappointed with the outcome and was working towards a merger with Mercer Super.
“We have worked hard to improve member outcomes, including reducing fees, and the result was mainly due to some periods of underperformance, particularly in the 2014-15 financial year and the turbulent global markets last year “, said.
Australian Catholic Super said its merger with UniSuper was on track to be completed later this year.
Super Consumers Australia’s Xavier O’Halloran said AMG Super was the only fund that had not made plans to merge or upgrade since last year.
“AMG Super has demonstrably failed and it’s time for it to make a decision about what it’s going to do.”
“Reforms work”
The performance test was introduced in July last year as part of the federal government’s Your Future, Your Super reforms.
Greater transparency and increased consequences were expected to weed out underperforming funds.
Last year, 13 funds failed the test; 10 of them plan to merge, or have already merged, with a fund that met performance benchmarks.
Two others have made improvements to prevent them from failing again, O’Halloran said.
“It does show that the reforms are working.”
APRA’s Margaret Cole said the majority of MySuper members, more than 13 million, are in a performance fund.
“The performance test has helped more than 5.1 million MySuper members (just over 38 per cent) now pay lower premiums than last year.”
The federal government will review how the performance test works before expanding it to other super products.
AMG Super has been contacted for comment.
“The clear message for Australians who see their super on this list is to weigh up whether your super fund is doing everything it can to provide for your retirement,” Mr O’Hallaron said.
“It’s never been easier to compare super fund returns and fees using the ATO’s YourSuper comparison tool.”