The financial regulator has revealed five superannuation funds have failed its annual performance test.
The Australian Prudential and Regulatory Authority (APRA) tested 69 default MySuper products against investment performance, fees and costs criteria.
Westpac Group's Retirement Wrap, which has 44,000 members and assets worth $3.2 billion, failed the test for the first time.
Four products failed for the second time, meaning they will now be closed to new members:
- BT Super's Retirement Wrap (BT is owned by Westpac)
- AMG Super, MySuper
- Energy Industries Superannuation Scheme – Pool A
- Australian Catholic Superannuation and Retirement Fund, LifetimeOne
The four funds are significant in size, with more than half a million members between them and assets worth almost $25 billion.
A spokesperson for EISS said it will soon merge with Cbus Super.
"[This] will provide our members with access to greater economies of scale and investment opportunities," they said.
A spokesperson for BT said it was disappointed with the outcome and working towards a merger with Mercer Super.
"We have worked hard to improve member outcomes, including reducing fees, and the outcome was mainly due to some periods of underperformance, particularly in the 2014-15 financial year and in last year's turbulent global markets," they said.
Australian Catholic Super said its merger with UniSuper was on track to be completed by the end of this year.
Super Consumers Australia's Xavier O'Halloran said AMG Super is the only fund that has not made plans to merge or improved since last year.
"AMG Super has demonstrably failed and it's about time it makes its mind up about what it's going to do."
'Reforms are working'
The performance test was introduced in July last year as part of the federal government's Your Future, Your Super reforms.
It was hoped greater transparency and increased consequences would weed out underperforming funds.
Last year, 13 funds failed the test — 10 of those are planning to merge, or have already merged, with a fund that met the performance benchmarks.
Another two have made improvements to avoid failing again, said Mr O'Halloran.
"It does show the reforms are working."
APRA's Margaret Cole said most MySuper members, more than 13 million, are in a performing fund.
"The performance test has contributed to over 5.1 million MySuper members (just over 38 per cent) now paying lower fees than they were last year."
The federal government will review the operation of the performance test before expanding it to other super products.
AMG Super has been contacted for comment.
"The clear message to Australians who see their super product on this list is to weigh up whether your super fund is doing its best to deliver for your retirement," Mr O'Hallaron said.
"It has never been easier to compare super fund returns and fees via the ATO's YourSuper comparison tool."
If you are a member of one of the underperforming funds and want to get in touch with ABC News, please email yourmoneyexplained@abc.net.au.
