APRA MySuper Performance Test Results

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APRA MySuper Performance Test Results

The first annual APRA MySuper Product Performance Test results have released. This performance test requirement was introduced as a part of the Your Future, Your Super reforms and compliments other changes introduced in the same Bill including access to a new interactive online super comparison tool hosted by the ATO.

APRA noted that there were around 80 MySuper products from various super funds or registrable superannuation entities (RSEs) in the Australian market. It assessed 76 out of the total 80 products with at least 5 years of performance history against an objective benchmark and found that 13 products failed to meet the benchmark.

According to APRA, trustees of failed products will need to write to members by 27 September 2021 advising them of their performance test outcome and provide details of the ATO’s YourSuper comparison tool. If the product fails the performance test in 2 consecutive years, the RSE licensee will be prohibited from accepting new beneficiaries into that product.

The YourSuper comparison tool allows users to display a table of MySuper products ranked by fees and net returns (updated quarterly), as well as compare up to 4 MySuper products at a time in more detail. When comparing products, the investment performance will be listed in easy to understand form. A “Performing” result indicates that the product has met or exceeded the performance test benchmark. “Underperforming” means the product has not met the benchmark and “Not assessed” means the product has had less than 5 years of performance history and has not been rated by APRA.

The data used by APRA for the performance test include:

  • net investment return;
  • strategic asset allocation;
  • total investments;
  • administration fees;
  • indirect cost ratio and administration costs;
  • administration-related tax expense/benefit;
  • advice fees;
  • indirect cost ratio advice costs; and
  • advice-related tax expense/benefit.

The performance test itself is a two-part test. It involves the assessment of investment performance relative to a benchmark portfolio created using the product’s strategic asset allocation, and an assessment of administration fees charged in the last financial year relative to the median fee charged for the category of product. If the product underperforms the combined test by more than 0.5%, the product is deemed to have failed the test.

Remember, the performance test results conducted by APRA only relates to MySuper products which are basic super accounts without unnecessary features and fees. RSE usually have multiple products in addition to MySuper products, so don’t panic if you see the name of your super fund (RSE) on the list of underperforming products. However, if you see the name of your specific product or receive a letter indicating that the product you’re in has failed the performance test, it may be time to investigate the reasons why or switch to a different product.