Thirteen major pension funds looking after the retirement savings of a million Australians CLOSE a performance test – here’s how you know if you need to change anything
- Australia’s super watchdog has called out the country’s underperforming funds
- The test of pension contributions and returns is part of reforms introduced on July 1
- More than 1 million customers receive a letter urging them to consider other funds
Australians are being urged to monitor how their pensions are performing after the regulator found that 13 of the country’s funds had failed a test that looked at both fees and investment returns.
The first annual performance test conducted this year by the Australian Prudential Regulation Authority found that $56.2 billion 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 super to get more bang for their buck.
As part of the change introduced on July 1, super funds are now scored by APRA each year and given a pass or fail in terms of fees versus investment returns (stock image)
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 Pension 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)
Union Cooperative Pension Fund – MySuper Balanced
Maritime Super – MYSUPER INVESTMENT OPTION
Pension Wrap – BT Super MySuper
The Victorian Independent Schools Superannuation Fund – VISSF Balanced Option (MySuper Product)
Some of the major funds that have received an unsatisfactory score include Commonwealth Bank Group Super, BT Super’s Retirement Wrap, and The Victorian Independent Schools Superannuation Fund.
If a fund fails for two consecutive years, it may not recruit new members until they have increased their returns.
Raising super underperforming funds in Australia’s $3 trillion superindustry is part of the federal government’s Your Future, Your Super reforms that came into effect on July 1.
Eight pension funds have already closed since the reforms were announced, according to pensions minister Jane Hume.
In contrast to the top ten best funds by net return for a 30-year $50,000 return are AustraliaSuper with a return of 9.44 percent, HOSTPLUS with a return of 9.33 percent and Unisuper with 9.01 percent.
Ms Hume said that of the 76 funds scored, those that failed should write to their 1.1 million account holders and give them details of the yourSuper comparison tool so they can look for a better deal.
She said the changes made ‘the pension system work harder for all Australians by increasing transparency and accountability of members’ earnings’.
Superannuation Minister Jane Hume (pictured) said the test would provide greater accountability and transparency for super funds
Martin Fahy, the chief executive of the Association of Superannuation Funds of Australia, argued that the test was flawed because customers were not told how much their product was failing.
“Even the underperforming funds in this test double the members’ money every 10 years. They generate 7 to 7.5 percent returns… amazing returns in the current conditions,” Dr. Fahy at the… ABC.
He also added that the test also failed to consider ethical investing.
“For example, there are funds that don’t invest in Amazon as a stock because of labor practices and labor rental considerations.
“If you haven’t kept Amazon as a stock in your international equity portfolio, you’ll have a significantly lower return than the benchmark,” he said.
This year’s APRA test included 76 funds in MySuper investment options, but will expand in 2022 to include a wider range of investment products.