Australians are being urged to check their superannuation, with many staying in dud funds with high fees and lacklustre returns, according to the industry regulator.
One-in-five “Choice” super funds — super products which are chosen by the consumer rather than the default option chosen by the employer — “significantly underperformed” across several key benchmarks of investment returns, fees and costs, and sustainability, new data from the Australian Prudential Regulation Authority (APRA) has revealed.
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While this is only a slight increase from the one in four in 2021, APRA deputy chair Margaret Cole said there were still “far too many” products delivering below-standard investment returns to members.
“As a result, APRA’s supervision of poorly performing Choice products will intensify, and trustees can expect even greater scrutiny of their product offering,” she said.
“Trustees with products that are underperforming or have unjustifiably high fees — or both — will need to explain why they haven’t already moved their members to products with better performance and better fee structures.”
APRA’s latest heat map, covering 163 Choice superannuation products that hold $292 billion worth of member funds, shines a light on the dud funds where customers are losing out.
Some of the underperforming products are closed to new members, meaning no one can join, but those still stuck in the funds may not even be aware the product is missing the mark.
APRA data discovered two thirds of Choice products closed to new members had “poor or significantly poor performance” relative to benchmarks.
There were 22 investment funds (28 per cent) that underperformed the benchmarks by up to 0.5 per cent and another 31 (39 per cent) that “significantly underperformed” by 0.5 per cent or more.
Those in closed products also faced higher fees, APRA found.
The average annual administration fee for members with $50,000 in a closed Choice product was $225, compared with $149 for open Choice products and $137 for MySuper products.
Customers may stick with their funds due to benefits such as insurance or on financial advice, Cole noted.
“Even so, APRA encourages all superannuation members to check whether they are satisfied with the outcomes they are getting from their chosen investment strategies,” she added.
Dud funds revealed
Of the 407 investment options with an eight-year history in the heatmap, APRA found 182 underperformed the benchmarks.
The brands named for “significantly poor investment returns” include:
- AUSCOAL Superannuation (Three products)
- Avanteos Investments (Three products)
- AvSuper (One product)
- BT Funds Management (Four products)
- Energy Industries Superannuation Scheme (Three products)
- Equity Trustees Superannuation (30 products)
- Nulis Nominees (Australia) (One product)
- OnePath Custodians (33 products)
- Perpetual Superannuation (One product)
- Rei Superannuation Fund (One product)
Brands named as having “significantly high administration fees” include:
- Diversa Trustees (10 products)
- Equity Trustees Superannuation (32 products)
- LGSS (One product)
- OnePath Custodians (One product)
- Prime Super (One product)
- SPSL (Two products)
- Towers Watson Superannuation (One product)