In a clear sign that the tail of underperforming funds in the super sector is being cleaned up, only one additional product failed the performance test this year. A further four products failed for a second time, but three of these already have plans to exit the industry.
This is a media release from Super Consumers Australia. It was originally published on 31st August, 2022.
“The test continues to set people up for a better retirement by weeding out underperforming products. In the space of a year, the repercussions of the performance test have driven fee reductions and mergers among underperformers”, says Xavier O’Halloran, Super Consumers Australia Director.
Ten of the 13 products that failed the test last year are either planning to or have already merged with a performing fund. Another two have made improvements to avoid failure, leaving one fund demonstrably failing members two years running.
“The bright line test means funds can no longer dress up their underperformance with marketing spin. Instead funds have been forced to face reality and act in their members best interests by merging or finding other improvements like reducing fees.”
“According to the regulator, mergers since 2019 have delivered combined total fee savings of $60 per person per year to approximately 350,000 MySuper members. And due to the test’s scrutiny on fees, over 5.1 million MySuper members are now paying lower fees than last year.”
The Government has announced a review of the operation of the performance test before expanding it to more products. The latest APRA data finds that over 60% of currently untested choice products on their heatmaps are delivering poor performance.
“We look forward to engaging with the review to ensure that the performance test continues to drive improvement across the entire market. Millions of Australians are in untested products, and they deserve to be in a superannuation fund that is working for them.”
“The clear message to Australians who see their super product on this list is to weigh up whether your super fund is doing its best to deliver for your retirement. It has never been easier to compare super fund returns and fees via the ATO’s YourSuper comparison tool.”
You can find the 2022 MySuper performance test results here.
Enjoy this article? Sign up to our monthly newsletter and stay up to date on the latest consumer policy news.