Why is there a performance test?
Although members are free to choose to invest their money in a variety of super funds, the government recognises that many members don't keep close tabs on the performance of their super fund relative to others in the market. While members want to maximise their retirement savings, and understand that choosing the right super fund and the right investment option is an important part of making that happen, it's not an easy choice to make. There are many different features, services, options and costs to compare that it can be hard to know what to focus on.
To help address this, the government has created two tools to assist members:
- The annual APRA MySuper performance test assesses MySuper products with at least five years of performance history against an objective benchmark that assesses two components:
- investment performance, and
- fees and costs.
- The Australian Taxation Office (ATO) offers the YourSuper comparison tool to help members compare super funds.
APRA requires super funds advise members if they fail the test.
How does the performance test work?
As part of the government's Your Future, Your Super reforms, which were designed to make sure the superannuation system delivers better outcomes for members, the annual APRA MySuper performance test:
- applies to all default (“MySuper”) products,
- requires all funds that fail the test to advise their members of that fact, and
- prohibits products that fail the test two years in a row from accepting new members until their net investment performance improves.
On 31 August 2022, APRA published the outcomes of its second annual test.
Of 69 super fund products tested, 64 passed and 5 failed.
We are pleased to advise Australian Retirement Trust's Super Savings MySuper product (Lifecycle Investment Strategy) passed the test.
The APRA Performance Test compares:
- the average investment return achieved by the fund (net of investment and administration fees) over a period of at least 5 years.
With
- the return that could have been achieved if the fund had invested in equivalent benchmark products set by APRA (net of the median level of fees) over that same period.
A fund fails the test if their returns were lower than the average by a difference of at least 0.5%.
What should members do if they have received a notice advising that their fund failed the performance test?
If members received a notice advising that their fund failed the performance test, it may be wise for them to review their superannuation provider. Unless they are comfortable with the reasons why their fund failed the test, or the actions it is taking (or has taken) to address the failure, then it may be time for them to consider moving to a better performing fund.
What should you do if one of your default funds fails the test?
If you have multiple default superannuation funds and one fails the test, contact the fund and ask them for details on why they failed the test and the steps they will take, or have taken, to improve the fund’s performance. If you're not satisfied with their response, it may be an opportunity to consider removing or replacing the fund if possible.
Where can members find out more?
For more information on the results of the 2022 MySuper performance test, please read APRA's media release.
For non-member employees seeking more information on the benefits of joining Australian Retirement Trust, please refer them to your plan microsite or alternatively australianretirementtrust.com.au/about/why-choose-us. They can also contact us on 13 11 84.