Super performance test results show need for system-wide quality testing

Today’s performance test results reveal the need to develop a quality test for all corners of the super system, especially retirement products.  

Today’s super performance test results have revealed 96 underperforming choice products in the market, and one underperforming default MySuper product. Disappointingly 12% of the tested choice market has failed to pass APRA’s quality benchmark, with 60,000 individual member accounts affected. 

“We strongly encourage people with their retirement savings invested in these super funds to consider whether they’re getting value for money. Failing the performance test is a clear sign that something has gone wrong at these funds,” says Xavier O’Halloran, Director, Super Consumers Australia.

“Poorly performing funds are a drain on people’s retirement savings so the message from the public is clear: lift your game, or leave the market,” says O’Halloran.

“We commend the Government for moving ahead with plans to expand the performance test, and cracking down on shoddy choice products. Our research has shown products which previously failed the performance test cut their fees by 20% on average. Failing super funds now need to act in their members’ best financial interests by merging or finding other business improvements, like reducing fees.”    

“There remains a major blindspot in the test – it currently doesn’t apply to retirement products. This leaves Australian retirees without protection when they need it most.”

In March 2023 there were 1.3 million member accounts in the retirement phase, holding $396 billion in members’ money. The recent Intergenerational Report shows we can expect these numbers to grow in the coming years, as super plays a bigger role in funding our retirement system.  

“The bad news is there’s little transparency over retirement products’ fees and performance, and no accountability for funds that poorly manage retirement products. Without this, how can the growing number of Australian retirees be confident that their fund is operating in their best interests?” 

“As a matter of urgency, we’re calling on the Government to expand an appropriate performance test to all APRA-regulated funds, including retirement products,” said O’Halloran. “In the meantime, we’ll continue to work with the Government on tweaks and improvements to the current test.”