Three super funds fearful of second performance test failure
At least three of the superannuation funds which were deemed to have failed last year’s first-ever superannuation performance test are understood to have run their own numbers and prepared themselves for the possibility of a second failure.
The consequences of a second failure are serious with the twice-failed funds unable to accept new members and therefore under pressure to execute alternative strategies including exiting the industry or merging.
Thirteen superannuation fund products failed the first performance test the results of which were published in August last year but, importantly, more than half of those funds are now the subject of merger activity.
The 13 superannuation products named by the Australian Prudential Regulation Authority (APRA) as failing last year’s performance test are:
| RSE | MySuper product |
| AMG Super | AMG MySuper |
| ASGARD Independence Plan Division Two | ASGARD Employee MySuper |
| Australian Catholic Superannuation and Retirement Fund | LifetimeOne |
| AvSuper Fund | AvSuper Growth (MySuper) |
| BOC Gases Superannuation Fund | BOC MySuper |
| Christian Super | My Ethical Super |
| Colonial First State FirstChoice Superannuation Trust | FirstChoice Employer Super |
| Commonwealth Bank Group Super | Accumulate Plus Balanced |
| Energy Industries Superannuation Scheme-Pool A | Balanced (MySuper) |
| Labour Union Co-Operative Retirement Fund | MySuper Balanced |
| Maritime Super | MYSUPER INVESTMENT OPTION |
| Retirement Wrap | BT Super MySuper |
| The Victorian Independent Schools Superannuation Fund | VISSF Balanced Option (MySuper Product) |
Seven of the failed funds have been confirmed as being the subject of merger transactions, while an eighth is acknowledged to be in the throes of such a move.
On top of that two products which came under the Commonwealth Bank umbrella are now operating under the new ownership structure of Colonial First State.
Among the superannuation funds to have run their own performance test numbers this year are BT Super MySuper which is part of a major merger transaction with Mercer, Christian Super which is merging with Australian Ethical, LUCRF which is merging into to AustralianSuper, Australian Catholic Super which is merging with UniSuper, AvSuper which has reportedly moved to merge with the Commonwealth Superannuation Corporation, the Victorian Independent Schools Superannuation Fund which is merging with Aware Super and Maritime Super which has been expected to merge with Hostplus.
On top of this, EISS Super has been widely expected to announce a merger with Cbus.
The Assistant Treasurer, Stephen Jones has announced that Treasury will be reviewing the performance test methodology after the second-round outcomes are announced next month but that review is expected to have little impact on fund products deemed to have failed twice.
So much for “past performance is no guarantee of future returns”.
How can Wraps, with hundreds of investment options, be measured by the performance of one underlying fund?
How are funds full of unlisted assets measured against daily priced funds? This is insanity. Brought to you by a government regulator.