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Superannuation heatmaps frequently asked questions

These frequently asked questions provide guidance on how to understand the APRA superannuation heatmaps.

Understanding APRA’s heatmaps in the context of the new Annual Performance Test 
 

Under the Government’s Your Future, Your Super reforms (the YFYS reforms), APRA is required to conduct a performance test for MySuper and choice products. This is an annual test that assesses the investment returns and administration fees of MySuper products and trustee-directed products (TDPs). The first annual performance test was conducted by APRA for MySuper products in August 2021. Both MySuper and TDPs will be subject to the performance test from 2022. 

1. How do APRA’s heatmaps support the annual performance test? 

The heatmaps supports the performance test by providing additional insights across multiple dimensions and by providing a detailed data set for users to explore. 

The performance test is a single metric, whereas the heatmap provides a range of metrics over a range of time periods so that users can compare the performance relative to a number of benchmarks and over different time horizons.

MySuper Heatmap FAQs
 

General questions on the Heatmap

2. How does the December 2021 MySuper Product Heatmap differ from previous years?

The December 2021 MySuper Heatmap differs from previous years’ heatmaps in a number of areas. The changes have been made to align the methodology with the performance test methodology

The results of the Your Future, Your Super performance test have been included in the heatmap publication.

Changes to investment returns to align with the performance test methodology are:

  • The 2021 MySuper Heatmap combines the return history for products where there has been a change in the structure or nature of the product over time (e.g. single strategy to lifecycle).
  • Unlisted property and unlisted infrastructure assets are benchmarked against unlisted indices where they were benchmarked against their respective listed indices previously.
  • The time horizon of the investment returns metrics of six years has been increased to seven years to reflect the additional year of available data.
  • The underperformance threshold has been changed from -0.75% p.a. to -0.50% p.a. to align with the performance test.
  • The lifecycle product methodology has been changed from an age- and contribution-weighted approach to an asset-weighted approach. The asset-weighted approach is in line with the approach used in the performance test.

The fees and costs and the sustainability of member outcome metrics and colour thresholds remain unchanged from the 2020 MySuper Heatmap. 
The full MySuper Heatmap methodology can be found here.

APRA’s methodology for combining MySuper product performance history can be found in the Information Paper Combining MySuper product performance histories - APRA's approach.

3. Where can I find MySuper product performance against the annual performance test in the MySuper Heatmap?

The 2021 MySuper Heatmap includes two new columns to show whether a MySuper product passed or failed the 2021 performance test and the product’s numeric result for the 2021 performance test. The performance test results are located to the left of the investment returns metrics in the MySuper Heatmap. 

4. Does the Heatmap include all MySuper products?

Yes. The MySuper Heatmap includes all MySuper products (both single strategy and lifecycle products) offered by RSE licensees at the date of publication of the MySuper Heatmap.

Useful information for consumers seeking to better understand superannuation can be found on the Australian Securities and Investments Commission’s MoneySmart website.

5. What is the “as at” date of the December 2021 MySuper Heatmap?

For the ‘investment returns’ and ‘sustainability of member outcomes’ metrics, the MySuper Heatmap is based on data up to the period ending 30 June 2021. ‘Fees and costs’ data are effective 1 October 2021 – indirect cost ratios for lifecycle products are sourced from product disclosure statements, and all other fees and costs data are sourced from Reporting Standard SRS 703.0 Fees Disclosed.

6. When was the December 2021 MySuper Product Heatmap data locked down?

The 2021 MySuper Heatmap includes data received by APRA via Direct to APRA (“D2A”) by 29 October 2021.

7. What happened to updated data reported to APRA after 29 October 2021?

Any updated data received by APRA after 29 October 2021 is not included in the 2021 MySuper Heatmap. This data will be included in the next version of the MySuper Heatmap, planned for release in December 2022.

8. How can APRA be confident that the data underpinning the MySuper Heatmap is correct?

The MySuper Heatmap uses data reported by RSE licensees under mandatory reporting obligations, which are required to be of high quality and accurate. APRA also requires RSE licensees to promptly address data anomalies identified and weaknesses in their data management frameworks.

9. Which external consultants did APRA use to validate its methodology on MySuper Heatmaps in 2019?

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 2019 MySuper Heatmap:

David Bell - APRA engaged David Bell in a consulting-style capacity during the development of the MySuper Heatmap. In this capacity David reviewed and provided observations and suggestions on APRA’s proposed heatmap metrics relating to investment returns.

Deloitte - APRA retained Deloitte in the early stages of the MySuper 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 returns 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 Heatmap metrics, methodology or reporting as launched by APRA.

Rice Warner – APRA retained Rice Warner in the MySuper 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.

      

Choice Heatmap FAQs

General questions on the Heatmap
 

10. Why is APRA using external data to produce the 2021 Choice Heatmap?

As part of APRA’s commitment to increase the transparency of outcomes delivered by the choice sector, APRA has published the first Choice Heatmap using external data provided SuperRatings 

Data validation processes have been carried out by SuperRatings. This included direct engagement with entities to confirm data used for investment returns and validating data against APRA’s collections where possible.

APRA will expand the scope of the Choice Heatmap from next year using APRA’s expanded data collection.

Refer to the Methodology Paper – Choice Heatmap for further details on the use of external data.

11. Why does the Choice Heatmap include choice products and choice options?

A fund may offer multiple choice products - each choice product typically has a separate Product Disclosure Document (PDS). Within each product, a range of investment options are offered to members. Investment return and fees and costs metrics are presented in the Choice Heatmap at the investment option level. 

For example, ABC Super Fund has two choice products and each product has four investment options.

RSE name Choice product name Choice option name

 

 

 

ABC Super Fund 

 

ABC Super - Corporate

ABC Corporate - Balanced
 ABC Corporate - Capital Stable
ABC Corporate - Conservative
 ABC Corporate - High Growth

 

ABC Super - Personal

ABC Personal - Balanced
ABC Personal - Capital Stable
ABC Personal - Conservative
 ABC Personal - High Growth

12. What investment options are included in the 2021 Choice Heatmap?

The 2021 Choice Heatmap includes 727 multi-sector investment options in 120 choice accumulation products that are open to new members across 79 superannuation funds. 

For further information on APRA’s approach to segmenting the choice sector, please refer to the Information Paper Choice sector performance: improving outcomes for superannuation members.

The coverage of the Choice Heatmap will broaden over time as more data becomes available under APRA’s expanded data collection.

13. Will all trustee-directed products (TDPs) be included in the 2021 Choice Heatmap?

The 2021 Choice Heatmap does not cover all TDPs. The Choice Heatmap covers multi-sector investment options, where SuperRatings have data coverage. Refer to APRA’s FAQs published on 3 November for further guidance on TDPs.

14. Which investment options are not included in the 2021 Choice Heatmap?

The following options are not in scope for the 2021 Choice Heatmap:

  • Investment options already included in the MySuper Heatmap;
  • Options on wrap platform products; 
  • Defined benefit options; 
  • Options in the pension products;
  • Options in legacy products; and
  • Single sector options

APRA will consider how to improve transparency across these options, as data becomes available.

15. Why can’t I find my choice option in the 2021 Choice Heatmap?

The 2021 Choice Heatmap does not cover all choice investment options. Only a segment of the choice sector is covered: multi-sector investment options. Refer to Question 14 for the types of options that are not covered in the 2021 Choice Heatmap.

16. What is the “as at date” for the December 2021 Choice Heatmap?

All metrics in the December 2021 Choice Heatmap are based on data up to the period ending 30 June 2021. This is different to the MySuper Heatmap for the fees and costs metrics, which are based on data effective 1 October 2021.

17. What are APRA’s expectations of RSE licensees where the Choice Heatmap identifies areas of poor performance?

APRA expects RSE licensees to reflect on their performance in the Choice Heatmap and undertake analysis to assess the drivers of poor performance and take prompt action to improve performance. APRA expects this analysis is reflected in the RSE licensee’s annual outcomes assessments and business performance review.   

18. Will APRA publish the data used in producing the 2021 Choice Heatmap?

APRA will not publish data supplied by SuperRatings, such as investment returns and fees and costs. 

Data used to calculate the sustainability metrics is published APRA’s Annual fund-level superannuation statistics

19. Why has APRA included a growth asset allocation category in the 2021 Choice Heatmap?

As a wide range of investment options may be offered within different choice products, investment options in the 2021 Choice Heatmap have been categorised into one of five growth asset allocation categories (0-40%, 40-60%, 60-75%, 75-90%, 90-100%) to enable comparison of similar investment options.

Technical questions    
 

20. What asset allocation assumptions are reflected in the Choice Heatmap, given strategic asset allocation data has been provided by SuperRatings?

APRA has applied assumptions to map SuperRatings’ asset classes to the asset classes consistent with  Reporting Standard SRS 533.0 Asset Allocation. These include:

  • SuperRatings’ asset classes are mapped to APRA asset class types where this can be identified; 
  • where asset domicile for a particular asset class is not reported in the SuperRatings’ data set, a 50% Australian and 50% international assumption has been made;
  • all allocations to defensive property and defensive infrastructure are assumed to be 100% unlisted; and
  • where listing type is not known, allocations to growth property and growth infrastructure are assumed to be 50% listed and 50% unlisted.

APRA has conducted sensitivity analysis to ensure assumptions set are appropriate. 

Refer to the methodology paper for further details on the asset allocation assumptions.

21. Why doesn’t the December 2021 Choice Heatmap include investment returns longer than seven years?

Based on the availability of data, the Choice heatmap includes investment return metrics for 3, 5 and 7-year investment horizons, which are consistent with the MySuper Heatmap. 

APRA will include longer time horizons, such as 8-year or 10-year, in future Choice Heatmaps as data becomes available through APRA’s data collections.

22. Given the wide range of different investment styles and strategies in the choice sector, will APRA apply different benchmarks to different options?

The 2021 Choice Heatmap provides objective and comparable insights into key financial aspects that influence member outcomes across the choice sector. To allow for comparisons between choice investment options, APRA has applied a consistent approach to assess all multi-sector options in the 2021 Choice Heatmap.

 

General questions on both heatmaps
 

23. What do the heatmaps show?

The heatmaps enable like-for-like comparisons of outcomes being delivered to members in MySuper products and certain choice investment options, in the key areas of investment returns, and fees and costs. The heatmaps also provide growth trends for an RSE licensee’s business operations, which are relevant to assessing the sustainable delivery of member outcomes.

The heatmaps seek to foster a focus on continuous improvement across the superannuation industry by providing clear, credible and useful insights into the outcomes delivered to members.

24. How should the heatmaps be interpreted?

The heatmaps use colour to show how well a MySuper product or choice investment option is delivering appropriate outcomes for its members, relative to its peers and benchmarks.

  • When looking at investment returns, any product or option that is performing above a determined benchmark is coloured white. A colour gradient from pale yellow to crimson has been used for products and options that are performing below that benchmark.
  • For fees and costs, the colours have been applied slightly differently. Products with lower fees are coloured white through to amber and those with higher fees are coloured amber through to red.
  • For sustainability of member outcomes, products are coloured either white or amber, with amber indicating areas of concern that require further investigation to ensure appropriate member outcomes can continue to be provided into the future.

Importantly, APRA is not providing an overall assessment of each product based on all the metrics. Each MySuper product and choice investment option is assessed against each metric; a range of measures is necessary to assess performance outcomes. The heatmaps do not currently include measures of the value or performance of insurance offered, or the quality of other features such as member services.

25. Should I use the heatmaps to decide which MySuper product or Choice investment option to invest my retirement savings in?

The heatmaps are not intended to be used in isolation when making decisions about where an individual member directs their retirement savings. They are designed to enable like-for-like comparisons of outcomes being delivered by every MySuper product and certain choice investment options in the key areas of investment returns, and fees and costs. The heatmaps do not currently include measures of the value or performance of insurance offered, or the quality of other features such as member services.

The heatmaps are not a substitute for independent professional advice. Useful information for consumers seeking to better understand superannuation can be found on the Australian Securities and Investments Commission’s MoneySmart website.

Members who wish to compare the investment performance or fees of MySuper products can also use the YourSuper comparison tool.

26. My MySuper product or choice investment option shows up as all/mostly white. Does that mean it is an excellent MySuper product?

White (or absence of colour) indicates a MySuper product or a choice investment option has been performing above benchmarks for investment returns and fees and costs. It doesn’t mean there is no room for improvement for the MySuper product or choice investment option. Further, past performance is not a guarantee of future performance.

The heatmaps are not a substitute for independent professional advice. The heatmaps are not intended to be used in isolation when making decisions about where an individual member directs their retirement savings.

27. My MySuper Product or choice investment option shows up as mostly orange/red. Does that mean I should choose a different MySuper product, choice option, or move to another superannuation fund? 

A MySuper product or choice investment option that is ‘orange’ or ‘red’ on a particular metric in the heatmaps indicates that it has performed poorly against a benchmark for investment returns and fees and costs. A MySuper product or choice investment option with mostly orange / red indicates that APRA has concerns.    

Members could consider the Australian Tax Office’s YourSuper comparison tool, which incorporates the findings of the MySuper performance test. Useful information can also be found on the Australian Securities and Investments Commission’s MoneySmart website, for members seeking to better understand superannuation.

In addition, it is important to understand the actions RSE licensees are undertaking (or going to take) to address the areas where they are underperforming. Details contained within the Annual Outcomes Assessment and Annual Report, or discussed during Annual Members’ Meetings, may be helpful.

28. Does the heatmaps cover returns delivered to members? 

Yes. The heatmaps provide metrics covering MySuper product and certain choice investment option returns over three years, five years and seven years. These metrics include net returns, net investment returns and net investment returns relative to two benchmark portfolios.  Performance over longer periods, which is important when assessing superannuation outcomes, will be included as data for these longer periods becomes available.

29.  What does APRA mean by sustainability? Why does it matter?

Sustainability of member outcomes refers to the RSE licensee’s ability to continue delivering good financial outcomes to members into the future, and/or address areas that require improvement.

In an industry where retirement outcomes are delivered over decades, RSE licensees must be able to deliver quality outcomes over the long term if they are to truly safeguard their members’ best  financial interests.

30. Why are there grey cells with no values in the heatmaps?

Grey cells indicate insufficient historical data (due to lack of investment returns history and/or asset allocation data) to produce the relevant metrics; as a result there are no values for these items in the heatmaps.

31. How often will APRA publish the heatmaps? 

APRA intends to publish both the MySuper Heatmap and Choice Heatmap on an annual basis, with additional updates as deemed necessary.

32. Where can users provide feedback on the heatmaps?

Users can provide feedback on any aspect of the MySuper Heatmap and Choice Heatmap by emailing MemberOutcomes@apra.gov.au.

 

Regulatory Guide 97: Disclosing fees and costs in PDSs and periodic statements
 

ASIC released its update to Regulatory Guide 97: Disclosing fees and costs in PDSs and periodic statements on September 2020 which included transitional arrangements for RSE licensees. From 30 September 2020, RSE licensees may elect to comply with the updated PDS requirements, and by 30 September 2022 all RSE licensees are required to comply with these requirements.

33. How has APRA disclosed products which have adopted the RG 97 requirements?

Where a MySuper product has adopted the final requirements in RG 97 in their Product Disclosure Statement (PDS), the product is asterisked in the MySuper Heatmap.

For the December 2021 Choice Heatmap, fees and costs are based on data disclosed in PDS. Where the RSE licensee of a choice investment option has adopted the RG 97 requirement and disclosed its fees and costs accordingly, these fees have been used in the Choice Heatmap. 

34. What is the impact on those products that have adopted RG 97 compared to the products that have not adopted the new requirements?

In the 2021 MySuper Heatmap, the RSE licensees of 13 products have disclosed their fees and costs under new RG 97 fee disclosure requirements. For these products:

  • the ‘administration fees’ metrics uses ‘administration fees and costs’ disclosed in their Product Disclosure Statement (PDS); and
  • the ‘total fees and costs’ metrics uses the ‘administration fees and costs’, ‘investment fees and costs’, and ‘transaction costs’ disclosed in the product’s PDS.

APRA has analysed the fees and costs of these products and determined that the disclosed fees and costs for these MySuper products have not materially increased, and the shade of colour shown in the Heatmap is not materially different. Therefore, the overall conclusions regarding the performance of products on the Heatmap has not materially changed.

APRA will continue to monitor the adoption of the new RG 97 requirements across the industry and take this into consideration when reviewing the methodology, including the colour thresholds for future MySuper Heatmaps and Choice Heatmaps. 

     

Technical questions about both heatmaps
 

35. Why did APRA use target strategic asset allocation rather 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:

  • The strategic asset allocation considers the RSE licensee’s board-approved investment strategy: measuring actual returns against the RSE licensee’s strategic intent (i.e. the strategic asset allocation target) enables measurement of the RSE licensee’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 return 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 in 2019.

36. 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.

37. Can APRA disclose the index level data so that calculation can be re-performed?

No. Index level data are subject to confidentiality under the terms of the licensing agreements with the index providers.

38. How has APRA ensured that the Heatmap is based on fees gross of tax?

For the MySuper Heatmap, 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 RSE licensees 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 MySuper Heatmap is therefore based on data reported to APRA for fees that are gross of tax, following confirmation with RSE licensees.

For the December 2021 Choice Heatmap, the fees and costs disclosed in the PDSs are used. Where gross-of-tax and net-of-tax fees are both disclosed, the gross-of-tax fees are reflected in the Choice Heatmap.

39. Do the heatmaps take into account discounted fees for employer plans?

The Heatmaps are designed to enable like-for-like comparisons of outcomes being delivered to members who would join the superannuation product as a personal member (e.g. in the case of switching funds). As a result, the highest fee disclosed in the Product Disclosure Statement (or rack rate) is more likely to apply and is therefore reflected in the heatmaps.

40. How does the December 2021 heatmaps adjust for riskiness of assets in assessing investment returns?

The heatmaps consider investment risk associated with exposure to growth assets and certain asset classes. This is achieved by: 

  • classifying investment options into one of the five growth asset allocation categories in the Choice Heatmap. 
  • adjusting the Simple Reference Portfolio to match the total exposure of growth assets for each investment option in both heatmaps; and
  • adjusting the Strategic Asset Allocation benchmarking portfolio to match the strategic asset allocation of each individual investment option in both heatmaps.

APRA is committed to the continuous improvement of its heatmaps and welcomes feedback from the industry.