APRA sweep finds failures
Five superannuation products failed in a recent APRA performance sweep.
The Australian Prudential Regulation Authority (APRA) has released the results of the second MySuper performance test.
APRA assessed 69 MySuper products with at least five years of performance history against an objective benchmark that assesses two components: investment performance, and fees and costs.
Five products failed to meet the benchmark this year, including four that failed for the second time. A further five products that failed last year’s performance test passed this year.
Trustees of the product that failed for the first time will notify their members of the result by 28 September 2022.
The four products that failed the test for a second time are now closed to new members. Of those four products, three were offered by trustees with plans to exit the industry.
APRA Member Margaret Cole says plans are underway for the over 500,000 members of those three products to transfer to new MySuper products before the 2023 performance test.
The annual performance test was introduced last year to protect members from poor outcomes and hold trustees accountable for the implementation of their investment strategy.
Ms Cole says the overall results show outcomes have largely improved for superannuation members over the last 12 months.
“Pleasingly, almost 96 per cent of MySuper superannuation members are now in a performing MySuper product, equating to 13.1 million member accounts,” she said.
“Equally positive is that the performance test has contributed to over 5.1 million MySuper members (just over 38 per cent) now paying lower fees than they were last year.
“This is the culmination of APRA’s intensified supervisory approach, driving trustees to take meaningful action to improve member outcomes. APRA encourages superannuation trustees to continue to explore ways to improve the efficiency of their MySuper products,” Ms Cole said.