The five worst performing superannuation funds in the country have been revealed and millions of Australians have been told to move their money elsewhere.
The Australian Prudential Regulation Authority (APRA) tested 69 funds against the industry benchmark and five underperformed, and four failed the test a second time.
The bottom five were Westpac Group’s Retirement Wrap, BT Super’s Retirement Wrap, Energy Industries Superannuation Scheme Balanced MySuper, Lifetime One’s Australian Catholic Superannuation and Retirement Fund and AMG Super.
The five worst performing superannuation funds in the country have been revealed and millions of Australians have been told to move their money elsewhere (pictured young women in Melbourne)
The Australian Prudential Regulation Authority (APRA) tested 69 funds against the industry benchmark and five underperformed, four of which failed the test a second time (stock image)
The regulator looked at each fund’s costs, fees and performance over the past five years and compared the results to MySuper, the default option for those who don’t choose a specific retirement fund like Rest, Hostplus or AwareSuper.
APRA said that four of the superfunds had failed the test for the second time and will not be able to accept new clients.
“The four products that failed the test a second time are now closed to new members,” the regulator said in a statement.
“Of those four products, three were offered by trustees with plans to exit the industry.”
These three funds will have until September 28 to tell their clients to move their investments elsewhere.
Westpac Group’s Retirement Wrap failed for the first time, while the remaining four failed for the second time; some failed twice in two years.
The 500,000 Australians whose retirement is currently invested in one of the three funds are advised to switch their money and can be helped to move their funds to MySuper.
MySuper products are the default products offered by super funds and are where the majority of the population has their retirement money invested.
APRA said four of the five funds had now failed the test a second time and can no longer accept new clients (pictured a woman shopping in Sydney)
MySuper products are the default products offered by super funds and where the majority of the population has their retirement invested (in the photo, Sydney city workers)
Australian Superannuation Fund Association (ASFA) CEO Martin Fahey said three-quarters of the population were with an APRA-chosen fund, which has seen an overall improvement in the most recent performance test.
Mr Fahey told 7News that regular performance tests weeded out funds that weren’t working and ultimately saw Aussies see better performances in their super.
He said Westpac-owned BT Superfund had failed for the second time and, due to its large number of clients, had skewed the results.
“What we have is a particularly large fund, BT, which represented a very significant number of accounts,” he said.
“If you extract that, the numbers are even more amazing than they are.”
There were 13 million member accounts that passed the super performance test.
It comes just weeks after new data from the tax office revealed that the average Australian doesn’t have enough money to retire, with a typical balance of just $145,388.
This is well below the $535,000 recommended by the Retirement Funds Association of Australia (AFSA) for those retiring at age 67.
Only some of the wealthiest Australians, earning more than $180,000 a year, had more than the recommended retirement savings, while middle and average wage earners fell short.
It comes amid a national debate about how much money Australians need to retire.
New figures from the Australian Taxation Office showed the typical worker had an average balance of $145,388 in the 2019-20 tax year. Men had an average balance of $161,834 compared to $129,506 for women.
Australian Superannuation Fund Association (ASFA) CEO Martin Fahey said three-quarters of Australians were with an APRA-chosen fund, which has seen an overall improvement in the most recent performance test (in the photo, diners in Sydney)
Only Australians earning more than $180,000 a year, to be in the highest tax bracket, had more than enough recommended retirement savings, while workers in the middle and average area were far short (image is an image of File, Archive)
Both levels are well below the $164,000 ASFA recommends someone must have saved by age 40 to reach its comfortable retirement savings goal of $535,000 for homeowners receiving old-age pension at age 67. .
Meanwhile, workers in the top tax bracket, over $180,000, had higher average balances of $575,470, making them the only group to exceed ASFA’s retirement recommendation.
People with median and slightly below-average incomes, in the $37,000 to $90,000 tax bracket, had higher median balances of $116,698.
This covered the median taxable salary of $63,882, including $74,559 for men and $52,798 for women, and the figures include full-time and part-time employees.
Those in the $90,000 to $180,000 range, including the average full-time worker at $90,917, had average retirement savings of $249,830.
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