96 trustee-directed super products fail performance test

Mike Taylor

Managing Editor and Publisher

31 August 2023

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