Many superannuation customers are losing out, staying in dud funds with high fees, according to the latest data from the industry's regulator.
Superannuation products from BT, Westpac Group, Australian Catholic Superannuation and Equity Trustees have failed an important performance test, some for the second time.
The Australian Prudential Regulation Authority (APRA) has released its latest heat map, covering 163 superannuation "Choice" products that hold $292 billion worth of member funds.
One-in-five of the products featured has "significantly under-performed" benchmarks, the regulator said.
"While the data shows some improvement in the performance of Choice accumulation products, the fact remains that there are still far too many products delivering sub-standard investment returns to fund members," APRA deputy chair Margaret Cole said in a statement.
"As a result, APRA's supervision of poorly performing Choice products will intensify, and trustees can expect even greater scrutiny of their product offering.
"Trustees with products that are under-performing, 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."
Stuck in underperforming super funds
Some of the products blasted for under-performance have been closed to new members, meaning no-one can join.
However, that has not helped those still stuck in them.
The APRA data reveals two-thirds of so-called Choice investment options closed to new members had "poor or significantly poor performance" relative to benchmarks.
There were 22 funds (28 per cent) that under-performed the benchmarks by up to 0.5 per cent, and 31 more (39 per cent) that "significantly underperformed" by 0.5 per cent or more.
Fees were also higher in products closed to new members.
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 the base-level MySuper products.
APRA's Ms Cole said some members might choose to stay because of other things, such as insurance or financial advice, but urged anyone with a superannuation account to look around for a better deal.
'Significantly poor investment returns'
A list of funds were specifically noted for "significantly poor investment returns". This doesn't mean every single product they offer falls into that category.
Some of the brands noted include:
- AUSCOAL Superannuation
- BT Funds Management
- Energy Industries Superannuation
- Equity Trustees Superannuation (30 products)
- MLC Super Fund
- OnePath Custodians (33 products)
- Perpetual Superannuation
Five products were singled out for particular focus, and given a "fail" mark on APRA's performance test.
They are:
- BT Super MySuper from BT Funds Management
- Westpac Group Plan MySuper from BT Funds Management
- Balanced (MySuper) from Energy Industries Superannuation Scheme
- AMG MySuper from Equity Trustees Superannuation Limited
- LifetimeOne from SCS Super Pty which operates as Australian Catholic Superannuation and Retirement Fund
For all but the Westpac product, it is the second consecutive year these products have failed and they are banned from taking on new members.
Since the first heatmap was released in 2019 — after the banking royal commission, where APRA's oversight of superannuation was heavily criticised — 28 of the basic MySuper products have closed.
Although that means many people are doing better, there are around 800,000 member accounts in products with "significantly poor investment performance".
