Australian’s are being urged to check how their superannuation performs after the regulator failed 13 of the country’s funds in a test that looked at both fees and investment returns.
The first annual performance test run by the Australian Prudential Regulation Authority this year found that $56.2billion worth of taxpayers’ super was invested in underperforming products.
As a result more than a million Australians will soon receive a letter from APRA urging them to switch their super to get better value for money.
Australia’s underperforming super funds:
AMG Super – AMG MySuper
ASGARD Independence Plan Division Two – ASGARD Employee MySuper
Australian Catholic Superannuation and Retirement Fund – LifetimeOne
AvSuper Fund – AvSuper Growth (MySuper)
BOC Gases Superannuation Fund – BOC MySuper
Christian Super – My Ethical Super
Colonial First State FirstChoice Superannuation Trust
Commonwealth Bank Group Super – Accumulate Plus Balanced
Energy Industries Superannuation Scheme Pool A – Balanced (MySuper)
Labour Union Co-Operative Retirement Fund – MySuper Balanced
Maritime Super – MYSUPER INVESTMENT OPTION
Retirement Wrap – BT Super MySuper
The Victorian Independent Schools Superannuation Fund – VISSF Balanced Option (MySuper Product)
Some of the big name funds given a failing score include Commonwealth Bank Group Super, BT Super’s Retirement Wrap and The Victorian Independent Schools Superannuation Fund.
If a fund gets two consecutive years of failing scores they will be banned from recruiting new members until they lift their returns.
Calling out super underperforming funds in Australia’s $3trillion super industry is part of the federal government’s Your Future, Your Super reforms which came into effect on July 1.
Eight superannuation funds have already closed since the reforms were announced, according to Superannuation Minister Jane Hume.
In contrast the top ten best funds by net return for a 30-year-old with $50,000 include AustraliaSuper with a 9.44 per cent return, HOSTPLUS with a 9.33 per cent return and Unisuper with 9.01 per cent.
Ms Hume said of the 76 funds scored, those that failed would have to write to their 1.1million account holders and provide them with details of the YourSuper comparison tool so they can look for a better deal.
She said the changes worked to ensure ‘the superannuation system works harder for all Australians by increasing transparency and accountability of returns generated for members.’
Association of Superannuation Funds of Australia chief executive Martin Fahy argued the test was flawed because customers weren’t told by how much their product failed.
‘Even the funds in this test that are underperforming, are doubling the money of members every 10 years. They’re generating 7 to 7.5 per cent returns… amazing returns in the current circumstances,’ Dr Fahy told the ABC.
He also added the test also did not take into account ethical investing.
‘There are funds out there who, for instance, don’t invest in Amazon as a stock because of labour practices and labour hire considerations.
‘If you haven’t held Amazon as a stock in your international equity portfolio, you will have a significantly lower return than the benchmark,’ he said.
This year’s APRA test covered 76 funds in MySuper investment options but in 2022 is set to expand to include a wider range of investment products.