APRA grilled on not giving feedback to funds which failed performance test

As part of the Your Future, Your Super reforms, the government has mandated a performance test to ensure members are aware of how their fund measures up on key performance metrics.

APRA’s inaugural results showed 76 MySuper products have been assessed, with at least five years of performance history against the objective benchmark.

During a House of Representatives standing committee on economics meeting on Friday, Labor MP Andrew Leigh asked why APRA only published the passes and fails of each fund, without giving any feedback to the funds which failed, including AMG Super, Colonial First State FirstChoice Superannuation Trust, Commonwealth Bank Group Super and Maritime Super.

“We do want to drive improvement,” APRA executive board member Margaret Cole responded to Mr Leigh.

“We were very concerned to deliver that test on time, very accurately and with integrity.

“I actually think that mandate we were given under the legislation was to publish a pass or fail. I think that delivers a very clear message to the consumers of the products…

“It is our intention as we move forward to publish the information you’re talking about.”

APRA’s executive director for the superannuation division, Suzanne Smith, added that the information used to calculate the performance test was available to those subject to it.

“The information won’t be a surprise to them,” Ms Smith said.

“Most of them had worked through a lot of that information to get a good sense of where they were going to land.

“While they haven’t got the final number, they would have a good understanding of the basis and the reasons for the outcome they received.”

APRA was asked to take on notice the reasons as to why the 13 funds failed as well as the 10 funds which were closest to passing.

In an opening statement, APRA chair Wayne Byres also addressed the debut performance test.

“As we have publicly stated, APRA has no tolerance for members to remain in underperforming products, particularly where the product is closed to new members, and as we noted when releasing the results, trustees of the 13 failing products 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,” he said.

“Since releasing the performance test results, APRA has intensified its supervision of trustees with products that failed the test and has required they provide a report identifying the causes of their underperformance and how they plan to address them.

“Trustees have to monitor their products closely and report important information to APRA — including relating to the movement of members and outflow of funds.”

The 13 funds which failed the test are required to write to members by 27 September 2021, advising them of their poor performance.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.