Retirement funds fail financial regulator test

The financial regulator has revealed that five superannuation funds have failed its annual performance test.

The Australian Prudential and Regulatory Authority (APRA) tested 69 default MySuper products against the criteria of performance, fees and investment costs.

Westpac Group’s Retirement Wrap, which has 44,000 members and assets valued at $3.2 billion, failed the test for the first time.

Four products have failed a second time, which means they will now be closed to new members:

  • BT Super Retirement Wrap (BT is owned by Westpac)
  • AMG Super, MySuper
  • Energy Industries Retirement Plan – Group A
  • Australian Catholic Retirement and Retirement Fund, LifetimeOne

the four funds are of significant size, 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.

A BT spokesman said it was disappointed with the result and was working to merge with Mercer Super.

“We have worked hard to improve member results, including lowering fees, and the result was mainly due to some periods of poor performance, particularly in fiscal 2014-15 and in the turbulent global markets last year,” they said.

Australian Catholic Super said its merger with UniSuper was on track to be completed by the end of this year.

Xavier O’Halloran of Super Consumers Australia said AMG Super is the only fund that has made no plans to merge or upgrade since last year.

“AMG Super has demonstrably failed and it’s about time it decides what it’s going to do.”

‘The reforms are working’

The performance test was introduced in July of last year as part of the federal government’s Your Future, Your Super reforms.

Greater transparency and greater consequences were expected to weed out underperforming funds.

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