MySuper Heatmap Frequently Asked Questions
These frequently asked questions provide guidance on how to understand the APRA MySuper Product Heatmap. The page includes answers to technical questions regarding the heatmap.
Updated: 19 March 2020
NEW - Latest updates
1. What are APRA’s plans for the next update to the December 2019 MySuper Product Heatmap?
Further to FAQ no. 10 in the general questions section below, APRA will publish in June 2020, the concise and expanded ‘fees and costs’ metrics included in the December 2019 heatmap with updated data. APRA’s decision to solely publish fee data reflects the purpose of the update - to show actions taken by trustees to address areas of underperformance, which APRA considers to reasonably be expected to have occurred since the heatmap was published in December 2019. Improvements to investment performance and sustainability would be expected to manifest over a longer timeframe, which APRA will reflect in later heatmap publications.
2. Why isn’t APRA publishing updates to the heatmap to reflect resubmitted historical data?
A small minority of trustees have resubmitted changes to their Strategic Asset Allocation in Reporting Standard SRS 533.0 Asset Allocation and their investment performance in Reporting Standard SRS 702.0 Investment Performance. APRA is validating these resubmissions and, if substantiated, the revised data will be reflected in the next iteration of the heatmap, planned for release in December 2020.
3. How can trustees ensure updated fees and costs are reflected in the heatmap?
Any ad-hoc submission of Reporting Standard SRS 703.0 Fees Disclosed received by APRA by 5pm on 29 May 2020 via Direct to APRA (“D2A”) will be included in the updated heatmap to be released in June 2020. Trustees can make a request to submit an ad-hoc submission of Reporting Standard SRS 703.0 Fees Disclosed by emailing DataAnalytics@apra.gov.au. Refer to guidance on APRA’s website.1
4. What if the updated fees and costs are submitted to APRA after 29 May 2020?
Any updated fees and costs submitted to APRA after 29 May 2020 will be reflected in the next iteration of the heatmap, planned for release in December 2020.
5. Some trustees have indicated they are increasing fees as a result of the Protecting Your Super measures. Will APRA publish increases in fees as well as reductions?
APRA will publish all changes in fees and costs submitted to APRA on Reporting Standard SRS 703.0 Fees Disclosed by 5pm on 29 May 2020.
1. What does the heatmap show?
The heatmap enables like-for-like comparisons of outcomes being delivered by every MySuper product in the key areas of investment performance and fees. It also provides indicators of trends in a trustee's operations relevant to the sustainable delivery of member outcomes.
The heatmap seeks to foster a culture of continuous improvement across the superannuation industry by providing clear, credible and useful insights into the outcomes that MySuper products are providing to their members.
APRA’s data insights paper APRA MySuper Product Heatmap provides further details on the key insights the heatmap provides.
2. How should I interpret the heatmap?
The heatmap uses colour to make it easy to see how well a MySuper product is delivering appropriate outcomes for its members, relative to its peers and benchmarks.
- When looking at investment returns, any product that is performing above a determined benchmark is coloured white. Products that are performing below that benchmark are presented on a continuous coloured gradient from pale yellow to dark red.
- For fees, the colours have been applied slightly differently. Products with lower fees will be coloured white through to amber and those with higher fees coloured amber through to red.
- For sustainability of member outcomes, products will be coloured either white or amber, with amber indicating that there are some concerning trends that need to be considered to ensure that appropriate member outcomes continue to be provided into the future.
Importantly, APRA is not providing an overall assessment of each product in absolute or relative terms. Each MySuper product is assessed against each metric; a range of measures is necessary to assess performance outcomes. The heatmap does not currently include measures of the value or performance of insurance offered, or the quality of other features such as member services.
3. Should I use the heatmap to decide which MySuper product to invest my retirement savings in?
The heatmap is not intended to be used in isolation when making decisions about where an individual member directs their retirement savings. It is designed to enable like-for-like comparisons of outcomes being delivered by every MySuper product in the key areas of investment performance and fees. It does not provide the complete picture of the outcomes that a MySuper product provides to individual members. For example, the heatmap does not currently include measures of the value or performance of insurance offered, or the quality of other features such as member services.
4. My MySuper product shows up as all/mostly white. Does that mean it is an excellent MySuper product?
White (or absence of colour) indicates a MySuper product has been performing around or above benchmarks for investment performance and fees and costs. It doesn’t mean there is no room for improvement for the MySuper product. Further, past performance is not a guarantee of future performance.
Additionally, the heatmap does not provide the complete picture of the outcomes that a MySuper product provides to individual members and should not be used in isolation when making decisions regarding superannuation products.
5. My MySuper product shows up as mostly orange/red. Does that mean I should choose a different MySuper product?
The heatmap does not provide the complete picture of the outcomes that a MySuper product provides to individual members and other aspects should be considered in determining whether a particular MySuper product is appropriate for an individual member. It is also important to ask the trustee providing the MySuper product about the actions they are taking (or going to take) to address the areas where they are underperforming.
6. Does the heatmap include all MySuper products?
Yes. The heatmap includes all MySuper products (both single strategy and lifecycle products) offered by trustees.
Useful information for consumers seeking to better understand superannuation can be found on the Australian Securities and Investments Commission’s MoneySmart website.
7. Does the heatmap cover member returns?
Yes. The heatmap provides metrics covering MySuper product returns for both three years and five years. These metrics include net returns, net investment returns and net investment returns relative to two benchmark portfolios. MySuper products have only been available for around five years. Performance over longer periods (which is important when assessing superannuation outcomes) will be included as data for these longer periods becomes available.
8. What does APRA mean by sustainability? Why does it matter?
The sustainability metrics in the heatmap provide an indication of a trustee’s ability to continue to deliver quality member outcomes into the future and address areas requiring improvement. The sustainability metrics, by themselves, are not a direct measure of performance or outcomes.
9. What is APRA doing about MySuper products that the heatmap shows as underperforming?
APRA is integrating the heatmap into its revised supervision risk and intensity model, which is aligned with its new enforcement approach. This ensures that the insights provided in the heatmap lead to a level of supervisory intensity and oversight that appropriately reflects the quality of the outcomes being delivered by each trustee and that trustees with continued areas of underperformance are subject to more intense supervisory action.
10. How often will APRA publish the heatmap?
APRA intends to publish the heatmap on an annual basis with additional updates to be undertaken as deemed necessary - such as in the first half of 2020 to reflect actions taken by trustees to improve outcomes for their members.
11. Why didn’t APRA consult on the heatmap?
In establishing the metrics to be included on the heatmap, APRA recognised that a significant number of different performance metrics could be used. However, some of these metrics may not facilitate appropriate like for like comparisons. As such, APRA considered it critical that the metrics to be included in the heatmap were based on its own analysis of the data and its significant understanding of current industry practice.
APRA has not publicly consulted on the heatmap before its release. However, recognising the importance of considering external views on whether the chosen metrics were well considered, appropriate and consistent with industry best practice, APRA engaged three external experts to validate its approach.
12. What is the “as at” date of the heatmap?
The heatmap is based on data up to 30 June 2019 but includes resubmissions relating to that period, up until 15 November 2019.
13. Why did APRA 'lock down' the heatmap on 15 November 2019?
The decision to present the data in the heatmap as submitted up to the date of releasing the methodology (15 November) was to ensure that all trustees were treated equally across industry, rather than allowing some to resubmit data and not others.
14. When did APRA first make known its intention to publish the heatmap?
APRA first announced its intention to publish performance assessment of MySuper products in Helen Rowell’s published speech to the Conference of Major Superannuation Funds in March 2019. She clearly indicated that our
“heatmaps will include a set of performance metrics at an individual fund and product level (where reliable data is available) across four key quantitative areas: investment performance; fees and costs; insurance; and scale and sustainability. Initially this will just be for MySuper products, but will be broadened to include choice products as our data collection in this area expands and we have confidence in its reliability.”
15. How can APRA be confident that the data underpinning the heatmap is correct?
The heatmap uses data reported to APRA by trustees under the relevant legislation, most of which is subject to audit requirements. APRA has also required trustees to address anomalies it has identified.
16. Which external consultants did APRA use to validate its methodology?
APRA regularly engages with external specialists to assist with specific projects such as the development of the heatmap and its superannuation data transformation program.
The following consultants were engaged to assist with the initial development of the heatmap:
- David Bell - APRA engaged David Bell in a consulting-style capacity during the development of the MySuper Product Heatmap. In this capacity David reviewed and provided observations and suggestions on APRA’s proposed heatmap metrics relating to investment performance.
- Deloitte - APRA retained Deloitte in the early stages of the MySuper Product Heatmap development through a short term consulting engagement. In this engagement Deloitte reviewed and provided summary observations on APRA’s initial proposed metrics and high level methodology used in two areas - specifically investment performance and fees and costs.
- No formal opinion or report was provided by Deloitte to APRA. Deloitte provided observations to APRA for the purpose of informing APRA’s further work on the heatmap. Deloitte was not engaged and did not review the final versions of the MySuper Product Heatmap metrics, methodology or reporting as launched by APRA.
- Rice Warner – APRA retained Rice Warner in the MySuper Product Heatmap development through a short term consulting engagement. In this engagement Rice Warner reviewed and provided summary observations and feedback on APRA’s proposed metrics and high level methodology. Rice Warner also reviewed draft calculations of the metrics in the heatmap and provided observations on the application of the methodology and on the interpretation of the data used as inputs to the methodology.
- No formal opinion or report was provided by Rice Warner to APRA. Rice Warner provided observations and feedback to APRA for the purpose of informing APRA’s further work on the Heatmap.
Rice Warner also assisted APRA in finalising the metrics but did not review the final version of the MySuper Product Heatmap metrics, methodology or reporting as launched by APRA.
17. Why did APRA use target strategic asset allocation rather than actual asset allocation in one of the reference portfolio benchmarks?
APRA has considered the merits of both approaches and has determined that using the strategic asset allocation is appropriate for the following reasons:
- It considers the trustee’s board-approved investment strategy: measuring actual returns against the trustee’s strategic intent (i.e. the strategic asset allocation target) enables measurement of a trustee’s asset allocation decisions (for example whether decisions to overweight or underweight certain asset classes have added value).
- Actual asset allocation is inherently unstable and is affected by market movements: using actual asset allocation to construct the benchmark portfolios will only measure a product’s performance relative to asset class benchmarks i.e. value added or detracted from asset class implementation only.
This approach was validated and supported by the external consultants engaged by APRA.
18. How has APRA chosen the growth and defensive allocation split for infrastructure and property assets which have been reported as listed or unlisted?
There are multiple ways of investing in infrastructure and property assets, for example through listed vehicles (e.g. REITS) or through unlisted investments (e.g. the direct purchase of property). The method of investing in these assets has an impact on the types of exposure provided. Listed investments typically have a high correlation with equity investments and therefore offer limited protection in the event of an equity market downturn. APRA has accordingly classified these assets as 100% growth.
While unlisted real asset investments are sensitive to economic conditions, they also demonstrate some characteristics associated with defensive assets, such as income generation. To account for the slightly more defensive nature of unlisted assets, APRA has categorised these assets as 75 per cent growth and 25 per cent defensive.
19. Can APRA disclose the index level data so that calculations can be re-performed?
No. Index level data are subject to confidentiality under the terms of the licensing agreements with the index providers.
20. How can APRA be confident that the data underpinning the heatmap is correct?
The heatmap uses data reported to APRA by trustees under the Financial Sector (Collection of Data) Act 2001. In addition to the legal obligations that apply to the provision of this data, a number of reporting forms, such as SRF 533.0 Asset Allocation and SRF 703.0 Fees Disclosed are also subject to audit requirements. APRA has also required trustees to address anomalies it has identified.
21. How has APRA ensured that the heatmap is based on fees gross of tax?
APRA undertook analysis of Product Disclosure Statement (PDS) information against data reported to APRA to assess its consistency and in particular whether fees were reported gross of tax, in line with the reporting instructions. Where anomalies were identified, APRA issued data queries and where necessary trustees resubmitted SRF 703.0 to report fees on a gross of tax basis; others confirmed their original data submission as having reported on a gross of tax basis.
The heatmap is therefore based on data reported to APRA for fees that are gross of tax, following confirmation with trustees.
22. Given APRA has made assumptions in its methodology, doesn’t this mean the performance of some entities to which they apply is under (over) stated?
APRA’s assumptions have relevance for a small minority of trustees, largely limited to the way the trustee has completed SRF 533.0 Asset Allocation. APRA has applied sensitivity analysis to its assumptions and determined that the performance of these products are only marginally affected; whilst the shade of colour shown in the heatmap would change marginally, the overall conclusions regarding the performance of the product would not materially change.