96 trustee-directed super products fail performance test
Ninety six choice sector performance funds have failed to pass the Your Future, Your Super performance test with the Australian Prudential Regulation Authority (APRA) outlining the problems with the trustee-direct super products and naming four trustees.
It said the 96 products had failed to meet test benchmarks and that 75% of the products were concentrated in products offered by just four trustees – N.M. Superannuation, Nulis Nominees, Oasis Fund Management and OnePath Custodians.
APRA said that just one MySuper product had failed to meet the test benchmarks with AMG MySuper failing for a third consecutive year. The fund has already been closed to new members.
Announcing the outcome, APRA noted that the median administration fees and costs for platform trustee direct products were highest at 0.54% of assets, compared to 0.27% for non-platform trustee directed products and 0.26% for MySUper products.
Trustees of products that failed to pass the benchmarks must notify their members of the test outcomes by 28 September 2023. Trustees cannot accept new members into products that have failed for two consecutive years.
Commenting on the outcome, APRA Deputy Chair Margaret Cole said the expanded scope of this year’s test had significantly enhanced transparency over a wider range of super investment options.
“The annual performance test remains a powerful tool to help APRA hold trustees to account for product performance, fees and costs. Since its introduction in 2021, nine underperforming MySuper products have exited the market and a total of 800,000 members, with combined assets of $39 billion, have moved to better performing products.”
Cole noted that evaluating choice product performance was more nuanced than for default MySuper products.
“Members in trustee directed products make active decisions about their investment options and some might select products for reasons beyond performance. Nevertheless, all trustees must take responsibility for the products they make available and ensure the products they offer are in their members’ best financial interests.”
“We acknowledge that some trustees with multiple failed products have rationalisation programs underway to improve member outcomes. APRA expects heightened focus on these underperforming products and will be monitoring the progress of product consolidation programs closely,” she said.
Australian Retirement Trust was fast out of the blocks expressing regret that the QSuper Socially Responsible option had failed the test and pointing to work being undertaken to address the problem.
Failing products
| RSE | Investment option name/s |
|---|---|
| Australian Meat Industry Superannuation Trust | High Growth Super Option |
| Australian Retirement Trust | QSuper Socially Responsible |
| Citibank Australia Staff Superannuation Fund | Bonds Plus |
| ClearView Retirement Plan |
|
| Crescent Wealth Superannuation Fund |
|
| OneSuper |
|
| Retirement Portfolio Service |
|
| Smart Future Trust |
|
| Tidswell Master Superannuation Plan | Cruelty Free Growth |
Failing products
| RSE | Investment option name |
|---|---|
| AvWrap Retirement Service | MLC0398AU |
| IOOF Portfolio Service Superannuation Fund |
|
| MLC Superannuation Fund |
|
| Oasis Superannuation Master Trust |
|
| Premiumchoice Retirement Service |
|
| Retirement Portfolio Service |
|
| The Bendigo Superannuation Plan |
|
| Wealth Personal Superannuation and Pension Fund |
|
Might be time for these managers to buy unlisted assets. You just revalue them higher every year and performance issues all fixed. What a joke the regulators are. They are either clueless to how investing actually works (risk reward trade off) or this is agenda based.
It’s all about the optics with regulators. And justifying their jobs. And securing the next one in the ISA space.
Don’t let the truth get in the way of a good story
Very disingenuous for APRA to trumpet that platform (by which they mean Wrap) admin fees are much higher than non platform. APRA’s methodology uses a ridiculously unrepresentative account balance of $50K in its fee calculations. Wrap products with sliding admin fee scales are significantly disadvantaged by this methodology, and in practice there would be few Wrap super accounts with balances so low. If the calculation was done based on a more typical Wrap super account balance of $500K – $1M, then Wrap admin fees would be much lower in percentage terms. Even lower when factoring in aggregation across multiple family member and investment type accounts, that some Wrap platforms use to further reduce average percentage fees per account.
Seems like yet another deliberate misrepresentation by our rogue regulators, to favour their union super fellow travellers.
ASIC & APRA’s unwavering biased promotion & support of all things Industry Super = REGULATORY CAPTURE CORRUPTION at its worst.
Absolutely appalling methodology using $50k as the balance to test a wrap product.
Get’s them the answer they want so realistically it is excellent research methodology. Not logical but I haven’t seen anything done by ASIC or APRA in more than 10 years that could be considered logical.
I thought that Canberra was a place where you could reliably get well considered legislation and outcomes.
I’m learning that this idea couldn’t be further from the truth. Canberra can jog on.