Thirteen Australian superannuation funds have failed the federal government's inaugural MySuper Product Performance Test, including funds from the Commonwealth Bank and Westpac.
The first annual performance results for MySuper products have been released as the federal government tries to reduce fees and push dud funds out of the market.
New data released on Tuesday found $56.2 billion is invested in underperforming products, covering almost 1.1 million superannuation accounts.
Of 76 MySuper products in the survey, almost one-fifth have underperformed.
"It is welcome news that more than 84 per cent of products passed the performance test, however APRA remains concerned about those members in products that failed," APRA Executive Board Member Margaret Cole said.
"Trustees of the 13 products that failed the test now face an important choice: they can urgently make the improvements needed to ensure they pass next year's test or start planning to transfer their members to a fund that can deliver better outcomes for them.
Australia's worst-performing super funds
- AMG Super – AMG MySuper
- ASGARD Independence Plan Division Two – ASGARD Employee MySuper
- Australian Catholic Superannuation and Retirement Fund – LifetimeOne
- AvSuper Fund – AvSuper Growth (MySuper)
- BOC Gases Superannuation Fund – BOC MySuper
- Christian Super – My Ethical Super
- Colonial First State FirstChoice Superannuation Trust – FirstChoice Employer Super Fund
- Commonwealth Bank Group Super – Accumulate Plus Balanced
- Energy Industries Superannuation Scheme-Pool A – Balanced (MySuper)
- Labour Union Co-Operative Retirement Fund – MySuper Balanced
- Maritime Super – MYSUPER INVESTMENT OPTION
- Retirement Wrap – BT Super MySuper
- The Victorian Independent Schools Superannuation Fund – VISSF Balanced Option (MySuper Product)
What are MySuper superannuation funds?
MySuper funds are a default account for people who do not choose their own superannuation fund when they start work.
Funds which fail the test must notify members and provide them with details of the YourSuper comparison tool so they can be armed with information to make a choice about switching to a different product.
"Products that fail the annual performance test again next year will be closed to new members until their performance improves," Treasurer Josh Frydenberg said.
Importantly, eight products have exited the market since the performance test was brought in, he said.
Chipping away at inefficiencies, the government has capped fees on low balances, removed unnecessary insurance premiums, eliminated unintended multiple accounts, reunited lost super with rightful owners, and banned exit fees.
Almost one-fifth of the 76 superannuation products surveyed underperformed. Credit: AAP
The federal government estimates the "your future, your super" changes will save workers $17.9 billion over 10 years.
From next year, the annual performance test will be expanded to a wider range of super products to make sure workers are not robbed of a more comfortable retirement.
Minister for Superannuation Jane Hume says it's easier than ever to compare funds and get information about rip-offs from fees or dud performance.
The super industry has hit the dizzying heights of $3.3 trillion, Jane Hume told parliament on Tuesday.
"It is bigger than GDP. It is bigger than the ASX. It has doubled in size since the coalition came to government."
Australians still pay $30 billion a year on super fees, more than on energy bills, but a new tax office portal is providing information to help people find a different product.
"We inherited a system that was riddled with flaws," Senator Hume said.
'We inherited a system that was riddled with flaws.'
The Association of Superannuation Funds of Australia has urged consumers to be careful about how they interpret the results of the "confusing" performance test and to think carefully before making important decisions.
"Stamping a product with a fail, without any context, is the fastest way to spark fear and confusion among members," ASFA chief Martin Fahy said.
"Among these so-called 'underperformers' we have products which have doubled people's investments over the past decade."
