The financial regulator has revealed that five superannuation funds have failed its annual performance test.
Key points:
- Five super products have failed the APRA test
- Four will be closed to new members after failing for the second time
- APRA tested 69 default MySuper products
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.
Last year, 13 funds failed the test: 10 of them plan to merge, or have already merged, with one fund that met performance benchmarks.
Two others have made improvements to avoid failing again, O’Halloran said.
“It shows that the reforms are working.”
APRA’s Margaret Cole said most of MySuper’s members, more than 13 million, are in an active background.
“The performance test has contributed to more than 5.1 million MySuper members (just over 38 percent) now paying lower rates 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 to Australians who see their super product on this list is to assess whether their super fund is doing all it can to meet their retirement,” O’Hallaron said.
“It’s never been easier to compare super fund yields and fees through the ATO’s YourSuper comparison tool.”
Leave a Reply