APRA calls out choice super products that are falling short
Aussies could be losing retirement money as some superannuation funds failed a recent performance test of choice super products.
About 1 in 10 super products tested didn’t pass the Australian Prudential Regulation Authority’s (APRA) quality benchmark. This means as many as 60,000 member accounts have been affected, according to Super Consumer.
The total superannuation assets of members was $2.1 trillion as at 31 March 2023, with $396 billion in ‘choice’ retirement products. As the recent Intergenerational Report forecasts an expected increase in the collective assets of members, super could form most of Australia’s retirement system in the years ahead.
But poorly performing funds will likely impact the super balance of many Aussies, leaving them with less retirement savings. And ‘choice’ products, which are those actively chosen by members as opposed to default super products, make up a significant portion of the overall super product landscape.
Default products are called MySuper and are the ones selected for members by employers.
“If the products of some super funds don’t pass the performance test, it can be a bit of a warning sign. So Aussies may want to take a second look at their fund and think about whether they’re getting their money’s worth,” says Peter Marshall, Mozo’s banking expert.
Managing super with poorly performing funds
Generally, super funds haven’t had any accountability for the bad management of their retirement products. This suggests that funds may need more of a push to improve performance.
In saying that, some super funds have slashed their fees by roughly 20% when products had previously failed the performance test, according to Super Consumers.
Poorly performing super funds could commit to reducing fees, or make other business adjustments that aim to work in their members’ best financial interests.
But if the long-term performance of your fund isn’t where it should be, there are steps that you can take to potentially improve the outcome of your retirement savings. For instance, you might consider seeking professional advice.
The difference of a few dollars in the short-term can start to add up by the time you retire, so it’s important to track the investment returns of your super fund.
If you want to know more about the inner-workings of super, check out our superannuation guides hub and start prepping your retirement plan.