AIST calls for performance tests to be extended
The superannuation industry body says that while a reduction in fees for super members is encouraging, more needs to be done to address underperforming funds.
The MySuper Heatmap released by the Australian Prudential Regulation Authority on Thursday (15 December) indicated that 8.1 million members, representing 56 per cent of all accounts, had saved $210 million in fees and costs since the 2021 Heatmap was published.
The Heatmap evaluates the performance of all MySuper products based on investment returns, fees and costs and long-term sustainability of member outcomes and includes each product’s result under the Annual Performance Test.
AIST chief executive Eva Scheerlinck noted that there has been downward pressure on fees for some time, “led by the profit-to-member funds which return profit to members and do not pay external shareholders”.
However, Ms Scheerlinck said that although it was encouraging to see more funds reduce their fees, what ultimately mattered was the net return to members.
“Low fees are not enough — your fund must also deliver a competitive net return,” she said.
Although MySuper products with “significantly poor” investment performance had 350,000 fewer members than in 2021, AIST is concerned that these underperforming products have retained about 800,000 members’ accounts.
“Given that only three in 10 members in underperforming funds have moved, it underlines the fact that more needs to be done about underperforming funds at a system level,” said Ms Scheerlinck.
“We have always stated that the onus to act should not be on the individual member but on the design of the system settings.”
Ms Scheerlinck said that as the peak body for profit-to-member funds, AIST continues to call for annual performance testing to be extended to all Choice accumulation products, rather than just MySuper products.
