The Australian Prudential Regulation Authority (APRA) is urging superannuation members – especially those whose MySuper products failed the recent performance test – to more actively engage with their super to maximise their retirement futures.
The call comes as APRA data shows only a small proportion of members of the products that failed the test have moved their savings elsewhere despite receiving letters notifying them that their product was officially underperforming.
APRA released the results of the first annual performance test of MySuper products on 31 August. Of the 76 MySuper products assessed by performance test, which was introduced as part of the Government’s Your Future, Your Super reforms, 13 failed and were forced to write to members notifying them of the result.
APRA data collected from the 13 failed MySuper products shows that some members have acted on advice in the letter that they should consider moving their savings to a better performing product, however it is early days.
From the one million member accounts in products that failed the test, fewer than 68,000 have been closed. That accounts for 7 per cent of total accounts in the failed products, or only 4.2 per cent ($2.2 billion) of assets.
Although APRA is working with the trustees of the failed products to ensure they urgently improve their performance, or to encourage them to merge with more sustainable funds, Executive Board Member Margaret Cole said members had every right to consider whether they could get better outcomes elsewhere.
"The trustees of APRA-regulated superannuation funds have a legal duty to act in the best financial interests of their members, and APRA is working hard to ensure they fulfil that obligation," Ms Cole said.
"That’s not a reason for members to sit back and avoid taking steps to act in their own best financial interests by ensuring they are in a high performing super product. Research shows that the difference in outcomes between a top product and an underperforming one can amount to hundreds of thousands of dollars over a working life.
"The vast range of products and options on the market can make the idea of trying to choose a new fund seem overwhelming, but there has never been more information available to consumers to help them make informed decisions about their super.
"The best place to start is the Australian Tax Office’s YourSuper comparison tool, which incorporates the findings of the MySuper performance test, while useful information can also be found on the Australian Securities and Investments Commission’s MoneySmart website. For those members with their savings in choice products, APRA will release its first Choice Product Heatmap next month, which will deliver clear, credible and comparable insights on the performance of a large segment of the choice market. At the same time, the next MySuper Product heatmap will include the performance test scores of every product assessed.
"Increased transparency is a powerful tool for regulators to bring about improvements in superannuation fund performance, but members should never forget they also have the power to make decisions that will better secure their future in retirement."