The Super Members Council says the latest superannuation performance test data released by APRA today highlights the importance and urgency of expanding test coverage to include all platform products and tackle fee gaming that masks warning signals to Australians in underperforming options.
The Council has consistently supported a strong performance test that covers all savings-phase super products as a crucial protection for all Australians against underperformance.
“The performance test is doing what it was created to do: weed out underperforming super products and funds and ensure hard-working Australians super savings are working hard for them,” says the Council’s CEO Misha Schubert.
Yet, concerningly, around 47% of assets in APRA-regulated super funds – including many products on the newer super ‘platforms’ - are still not covered by the performance test, creating a gaping safety hole in consumer safeguards and transparency for millions of Australians.
“Right now, you’ve still got millions of consumers who are essentially flying blind, not knowing whether their super is meeting the performance benchmark that applies across the rest of the system."
“That’s a giant hole in consumer safety — where your retirement savings are invested shouldn’t determine whether or not you’re protected by basic performance checks.”
These holes in test coverage are alarming when performance test data shows 42% of covered platform products by asset value only passed the performance test by less than 0.1%.
Persistent fee gaming can mask important safety signals to consumers that they are in a product that is not delivering them strong investment returns - and continues to occur despite APRA warnings last year.
These current gaps leave some members without clear, comparable performance information depending on where and how they invest their retirement savings – when every Australian deserves high standards of safety and transparency on the performance of their super.
The Council has also highlighted the need to strengthen the test's integrity to end fee gaming risks.
Under the current settings, administration fees are assessed over the most recent 12 months, compared to a 10‑year horizon for investment performance. That mismatch opens the door to tactical fee gaming at year’s end which can mask the fact that a super product is delivering poor returns.
Overall, Australians in profit-to-member funds continued to see strong performance from their funds, with more than 60% of products by share of member accounts and assets outperforming the benchmark by 0.5% or more. Fewer than 5% of retail products by member accounts and assets achieved this.
For products in retirement phase, the Council backs the development of a bespoke retirement quality filter to ensure comparable consumer protections on performance.
About us:
The opinions above are those of the author in their capacity as spokesperson for Super Members Council of Australia (SMC). SMC, the authors and all other persons involved in the preparation of this information are thereby not giving legal, financial or professional advice for individual persons or organisations.
Contact details:
Matt Dolan, 0474 909 471, [email protected]
