Aussies have $10 billion of their retirement savings invested in dud super funds, according to new data.
The Australian Prudential Regulation Authority’s (APRA) latest heat map report revealed one in five “choice” super products had significantly underperformed the regulator’s benchmarks.
The latest data covers 163 choice products, which currently hold $292 billion worth of members’ money. Choice products are those which enable members to choose their own investment options.
“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.
APRA found products that were closed to new members were more likely to underperform. Two-thirds of these products had “poor or significantly poor performance” compared to the benchmarks - with 28 per cent underperforming by up to 0.5 per cent, and 39 per cent by 0.5 per cent or more.
Fees were also higher, with members paying $225 for the average annual administration fee based on a $50,000 account balance. This was compared to $149 for open choice products and $137 for MySuper products.
Cole said some members may choose to stay in closed products because of non-performance-related benefits, such as insurance or financial advice, but she urged members to shop around.
Dud super funds
APRA called out 80 options with eight years of history that “significantly underperformed” its benchmarks by more than 0.50 per cent, on average, per annum. More than half (49 products) were still accepting new members.
This included products provided by:
OnePath - 33 options
Equity Trustees - 30 options
BT Retirement Wrap - 4 options
Mine Super - 3 options
Colonial First State - 3 options
Energy Industries Super Scheme - 3 options
AvSuper - 1 option
MLC Super - 1 option
Perpetual - 1 option
Rei Super - 1 option
The full list of underperforming options is available on APRA’s website.