Industry funds wants performance ranking of default funds

Mike Taylor

Managing Editor and Publisher

11 April 2023

The Government has failed to please industry superannuation funds with its approach flowing out of the Review of the Your Future, Your Super regime, with many claiming poorly performing funds will still be able to prosper.

The Australian Institute of Superannuation Trustees (AIST) has even gone so far as suggesting that default funds should be sorted in a way that filters out the under-performers.

AIST chief executive, Evan Scheerlinck said her organisation was disappointed the Government had not acted on stakeholder feedback that default sorting of products by fees in the comparison tool could unintentionally increase the ranking of poorly-performing products that had temporarily lowered fees.

“Given the objective of the tool is to help members find a good performing MySuper product, we believe products should be ranked by net returns first rather than fees, and results should be graduated rather describing products as performing or underperforming,” she said.

More broadly the AIST chief executive said that the Government’s proposed changes to the YFYS regime were a good first step but did not go far enough in holding trustees to account for the full range of poorly performing products.

Scheerlinck said that although applying the test to trustee‑directed products from this year broadens the scope of scrutiny, it was not unexpected and falls short of AIST’s position that that all APRA-regulated accumulation products should be tested, including poorly-performing Choice products.

“Without this, the members of products not included in the YourSuper comparison tool and that are not tested will be unable to compare their fund with others, which is particularly relevant if they have received advice from unscrupulous providers to switch from a MySuper product to a high fee, underperforming Choice product.”

In addition, Ms Scheerlinck noted that changes need to be made to ensure members cannot be stapled to an untested or underperforming product.