RateCity.com.au
powering smart financial decisions

APRA reveals 13 super funds that failed its performance test

APRA reveals 13 super funds that failed its performance test

More than one million Australians are members of underperforming super funds, according to results from the latest MySuper Product Performance Test performed by the Australian Prudential Regulation Authority (APRA).

Your superannuation fund is one of those financial products that Aussies tend to set and forget, but this mentality could be costing you big time.

APRA has assessed the returns generated by superannuation funds over the past seven years, as well as their fees, and listed those that do not meet its objective benchmark. APRA has revealed that 13 super funds of 76 tested have failed its assessment.

Super funds with MySuper products that failed the test - APRA

  • AMG Super
  • ASGARD
  • Australian Catholic Superannuation and Retirement Fund
  • AvSuper Fund
  • BOC Gases Superannuation Fund
  • Christian Super
  • Colonial First State First Choice
  • Commonwealth Bank Group Super
  • Energy Industries Superannuation Scheme-Pool A
  • Labour Union Co-Operative Retirement Fund
  • Maritime Super
  • Retirement Wrap
  • The Victorian Independent Schools Superannuation Fund

APRA Executive Board Member, Margaret Cole, said: “It is welcome news that more than 84 per cent of products passed the performance test, however APRA remains concerned about those members in products that failed.”

“Trustees of the 13 products that failed the test now face an important choice: they can urgently make the improvements needed to ensure they pass next year’s test or start planning to transfer their members to a fund that can deliver better outcomes for them," Ms Cole Said. 

These 13 funds will now have to write to their members by 27 September 2021 to let them know that the super fund holding their retirement nest eggs have failed the government test.

They will also have to sit down with APRA to identify why they failed the test and what measures they can put in place to lift their game. If they don’t, and they fail again next year, then they could be blocked from taking on new customers until they improve.

If your super fund didn’t pass the test, what should you do?

If your superannuation fund is listed above and you have received a letter, don’t panic just yet. Instead, consider using this as motivation to see if other superannuation funds on the market may better suit your financial goals.

Top performing MySuper funds

The ATO allows you to view top performing superannuation funds using its YourSuper Comparison Tool. Based on this data, here are the top performing MySuper products, based on its leading “7-year net return” funds.

Top performing super funds with MySuper products - ATO

Super fund7-Year Net Return
Local Government Super9.46%
Australian Super9.44%
HOSTPLUS9.33%
AON9.14%
UniSuper9.01%

Source: ATO YourSuper Comparison Tool.

Note: Rankings based on an average 30-year-old Australian with a $50,000 balance (excluded any restricted funds).

Switching superannuation funds is not a financial decision to take lightly, so it’s best to weigh up the pros and cons of both options before deciding. You will also want to assess the following factors against your own preferences and financial situation:

  • Performance
  • Fees
  • Insurance options
  • Investment options
  • Customer service

Even if you don’t get a letter, it is still worth checking in on your super funds’ performance at least once a year to assess your returns, the fees you’ve been charged, and whether you’re got the right product for your life stage.

Remember if you do decide to make the switch to ensure you notify your employer you’ve changed funds, and that you close the old superannuation account down. The last thing you want is for two lots of super fees eating into your nest egg.

Did you find this helpful? Why not share this news?

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

Advertisement

RateCity
ratecity-newsletter

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the RateCity Privacy Policy, Terms of Use and Disclaimer.

Advertisement

Learn more about superannuation

What is a superannuation fund?

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

  • Retail funds
  • Industry funds
  • Public sector funds
  • Corporate funds
  • Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.

How many superannuation funds are there?

There are more than 200 different superannuation funds.

How do you open a superannuation account?

Opening a superannuation account is simple. When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You might want to provide your tax file number as well – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

How do you create a superannuation account?

Before you create a superannuation account, you’ll need to check if you’re allowed to choose your own fund. Most Australians can, but this option doesn’t apply to some workers who are covered by industrial agreements or who are members of defined benefits funds.

Assuming you are able to choose your own fund, the next step should be research, because there are more than 200 different superannuation funds in Australia.

Once you’ve decided on your preferred superannuation fund, head to that provider’s website, where you should be able to fill in an online application or download the appropriate forms. You’ll need your tax file number (assuming you don’t want to be charged a higher tax rate), your contact details and your employer’s details (if you’re employed).

How do you set up superannuation?

Before you set up a superannuation account, you’ll need to check if you’re allowed to choose your own fund. Most Australians can, but this option doesn’t apply to some workers who are covered by industrial agreements or who are members of defined benefits funds.

Assuming you are able to choose your own fund, the next step should be research, because there are more than 200 different superannuation funds in Australia.

Once you’ve decided on your preferred superannuation fund, head to that provider’s website, where you should be able to fill in an online application or download the appropriate forms. You’ll need your tax file number (assuming you don’t want to be charged a higher tax rate), your contact details and your employer’s details (if you’re employed).

How is superannuation regulated?

The Australian Prudential Regulation Authority (APRA) regulates ordinary superannuation accounts. Self-managed superannuation funds (SMSFs) are regulated by the Australian Taxation Office.

How do I change my superannuation fund?

Changing superannuation funds is a common and straightforward process. You can do it through your MyGov account or by filling out a rollover form and sending it to your new fund. You’ll also have to provide proof of identity.

What superannuation details do I give to my employer?

When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You should also provide your tax file number – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

Can I choose a superannuation fund or does my employer choose one for me?

Most people can choose their own superannuation fund. However, you might not have this option if you are a member of certain defined benefit funds or covered by certain industrial agreements. If you don’t choose a superannuation fund, your employer will choose one for you.

What is superannuation?

Superannuation is money set aside for your retirement. This money is automatically paid into your superannuation fund by your employer.

What is the difference between accumulation and defined benefit funds?

A majority of Australians are in accumulation funds. These funds grow according to the amount of money invested and the return on that money.

A minority of Australians are in defined benefit funds – many of which are now closed to new members. These funds give payouts according to specific rules, such as how long the worker has been with their employer and their final salary before they retired.

How do I combine several superannuation accounts into one account?

The process used to consolidate several superannuation accounts into one is the same process used to change superannuation funds. This can be done through your MyGov account or by filling out a rollover form and sending it to your chosen fund.

What fees do superannuation funds charge?

Superannuation funds can charge a range of fees, including:

  • Activity-based fees – for specific, irregular services, such as splitting an account after a divorce
  • Administration fees – to cover the cost of managing your account
  • Advice fees – for personal investment advice
  • Buy/sell spread fees – when you make contributions, switches and withdrawals
  • Exit fees – when you close your account
  • Investment fees – to cover the cost of managing your investments
  • Switching fees – when you choose a new investment option within the same fund

How do you access superannuation?

Accessing your superannuation is a simple administrative procedure – you just ask your fund to pay it. You can access your superannuation in three different ways:

  • Lump sum
  • Account-based pension
  • Part lump sum and part account-based pension

However, please note that your superannuation fund will only be able to make a payout if you meet the ‘conditions of release’. The conditions of release say you can claim your super when you reach:

  • Age 65
  • Your ‘preservation age’ and retire
  • Your preservation age and begin a ‘transition to retirement’ while still working

The preservation age has six different categories:

Date of birth Preservation age
Before 1 July 1960 55
1 July 1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
From 1 July 1964 60

There are also seven special circumstances under which you can claim your superannuation:

  • Compassionate grounds
  • Severe financial hardship
  • Temporary incapacity
  • Permanent incapacity
  • Superannuation inheritance
  • Superannuation balance under $200
  • Temporary resident departing Australia