Last week, the Australian Prudential Regulation Authority (APRA) released its 2024 superannuation performance test, which evaluated 57 MySuper products and 590 trustee-directed products, a subset of the Choice segment.
For the first time since the test was first launched, all MySuper products, comprising 15.7 million member accounts and nearly $1.1 trillion in total assets, passed.
In comparison, one product failed in 2023, five failed in 2022, and 13 failed the inaugural test in 2021.
However, SCA said the failure to test all products is leaving retirees in the dark about whether super funds are managing their money appropriately.
The APRA test results covered 19.8 million member accounts worth $1.47 trillion, but SCA said it continues to leave out 1.3 million accounts of retirees with account-based pensions worth $451 billion.
“Retirees deserve to know if their super investments are good value for money,” said Xavier O’Halloran, SCA director.
He added that APRA has collected data on historical performance of retirement account-based pensions since 2022 but has not published this data.
“Account-based pensions are similar investments to the MySuper and trustee-directed products that are tested each year, but they are not currently tested,” O’Halloran said.
“APRA has been sitting on this data for several years while retirees languish in accounts serving up high fees and poor performance. We are calling on APRA to release the data before the end of the year so that Australian retirees can avoid poor-performing super products.”
Since the performance test started, it has driven 18 poorly performing MySuper options out of the system, which ensures that 1.4 million accounts will achieve better outcomes during the accumulation phase. Another 37 failing products with 17,000 accounts worth $1.8 billion were called out in the latest data.
Meanwhile, the Association of Superannuation Funds of Australia (ASFA) said the performance test has “helped the superannuation system to realise its aim of ensuring that every Australian’s retirement savings are invested in products that outperform inflation and work to secure their retirements”.
However, Mary Delahunty, ASFA CEO, cautioned the performance test in its current iteration does not capture every aspect of fund performance.
“While the performance test has been useful in improving fund performance, we also acknowledge that it’s a tool that considers a very limited range of indicators,” she said.
“Some members may choose to pursue strategies that will likely underperform in the short term, while anticipating long-term outperformance. This is especially relevant to ethical or green investment strategies.
“We call for further refinements to the test to ensure it fully reflects the diverse strategies employed across the industry, so that we are able to both maximise choice for members and secure their long-term retirement goals.”
