Is your Super fund a poor performer?

Sep 21, 2021

Recent news stories surrounding the Australian Prudential Regulation Authority (APRA) report detailing underperforming superannuation funds has certainly made many people sit up and take notice. That more than one million Australians have their retirement savings tied up in these funds is enough to make even the most confident investor reach for the phone to chat with their financial advisor

But what do they really mean when they talk about ‘how your super is performing?’ And is it even anything you should be worried about? Let’s take a closer look at what this APRA report is really about and what that (might) mean for your own retirement investments.

The APRA report didn’t come out of nowhere

In fact, in November 2019 APRAreleased details of a superannuation heatmap providing insights into the outcomes being delivered by every MySuper product.

Then in December 2020, APRA announced it had increased scrutiny of underperforming superannuation funds. The media release went on to say:

‘APRA is now reviewing whether, in relation to 10 MySuper products, eight trustees may have failed in their obligations to members of these products, including possible breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

That brings us to the most recent APRA media release on 31 August, 2021 where they released the results from the inaugural MySuper Product Performance Test introduced as part of the Government’s Your Future, Your Super reforms. They detailed that: 

‘There are 80 MySuper products. APRA has assessed 76 MySuper products with at least 5 years of performance history against the objective benchmark. A total of 13 products failed to meet the objective benchmark.’

While it’s true, some media outlets had fun with the number 13 and the term ‘underperforming’ in their headlines, the truth is a little different. 

What Super reforms have been passed?

Federal treasurer Josh Frydenberg announced in the 2021-22 Federal Budget, that major reforms to Australia’s superannuation system were coming. However, it wasn’t until mid-June 2021, and after months of parliamentary debate, that these reforms passed through parliament, coming into effect as of 1 July, 2021.

Supporters of the reforms say the changes could save Aussies some $17.9 billion in lost fees and charges over the next 10 years. While critics worry it will ‘staple’ workers to underperforming funds, ultimately costing them many thousands of dollars in lost money if they don’t do something about their superannuation.

What are ‘stapled’ superannuation funds?

When you start a new job, you’re asked to nominate the super fund to which your new employer will contribute. If you don’t have one, your super is invested into your employer’s preferred superannuation fund. That means people who change jobs and are not actively involved in their superannuation choices have lots of small super balances floating around and being eaten up by fees.

According to the Australian Taxation Office (ATO) website:

‘From 1 November 2021, if you have new employees start, you may have an extra step to take to comply with choice of fund rules if they don’t choose a super fund. You may now need to request their ‘stapled super fund’ details from us.

The change aims to reduce account fees by stopping new super accounts from being opened every time an employee starts a new job.’

As you can see, the intention is to save Aussies who are uninterested in their superannuation thousands of dollars in lost money and/or fees. The flipside is those same people risk being ‘stapled’ to an underperforming superannuation fund without even realising or understanding why.

Which Super funds underperformed?

This brings us back to APRA’s findings, and in the table below you can see which Super funds did not come up to scratch when it comes to their performance. 

Registrable superannuation entity MySuper product
AMG SuperAMG MySuper
ASGARD Independence Plan Division TwoASGARD Employee MySuper
Australian Catholic Superannuation and Retirement FundLifetimeOne
AvSuper FundAvSuper Growth (MySuper)
BOC Gases Superannuation FundBOC MySuper
Christian SuperMy Ethical Super
Colonial First State FirstChoice Superannuation TrustFirstChoice Employer Super
Commonwealth Bank Group SuperAccumulate Plus Balanced
Energy Industries Superannuation Scheme-Pool ABalanced (MySuper)
Labour Union Co-Operative Retirement FundMySuper Balanced
Retirement WrapBT Super MySuper
The Victorian Independent Schools Superannuation FundVISSF Balanced Option (MySuper Product)


What is superannuation performance?

Headlines screaming about how a super fund is performing is a loaded one. But the good thing about them is that they make people take interest in their superannuation.

One thing you really need to understand about superannuation is that it’s essentially a tax structure. And a highly tax-effective one when it comes to investing in your retirement. What this means is that because the government wants you to save for your own retirement, they offer some pretty nice tax concessions. Lower tax rates (concessional rates) coupled with compound interest makes saving for the future enticing. 

How a super fund performs for you depends on a few things, including:

  • who you’re investing with, 
  • why you’ve chosen to invest with them, and;
  • your long term goals.

Consequently, if you’ve not paid attention to your super, it’s likely not going to give you the results you hope and is underperforming for you.

It’s worth noting that the APRA test relates to the “Mysuper” options within the super fund which is generally the investment option used as a default. You can say, it’s the investment option for those who don’t really take an active interest in their super.

How do I choose a great super fund?

Did you know that most superannuation funds have different investment options for you to choose from? After all, it’s your money they’re investing. You can choose to invest conservatively, for example, 30 percent shares and property and 70 per cent cash and bonds, or opt for high growth assets such as investing up to 85 percent of your money into shares and property.  

These investment options fall into the broader categories of: 

  • high growth
  • growth
  • balanced
  • conservative
  • cash

With so much or your money being invested for so many years and decades, it makes sense to choose the types of investment that will help not only build your personal wealth but ensure you can comfortably retire when you want to, not when your superannuation balance dictates. 

What should I do if I get a letter in the mail about my underperforming super fund?

Look into your investment options and compare super funds. The ATO has a great comparison tool but acknowledges that everyone’s financial situation is different so you should seek independent financial advice.  

And if you’re still not sure, we’d love to chat with you because the Tribel team believes that retirement should be done on your own terms

Not only should retirement be on your own terms, but we can also help you build your own portfolio within your super fund. That means the next time you see headlines about underperforming super funds, you can turn the page or scroll past.

All of the material published on this web site is for information purposes only and does not constitute advice. This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a Financial Adviser, whether the information is appropriate in light of your particular needs and circumstances

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