Over 1 in 10 trustee-directed super products fail APRA’s test

The Australian Prudential Regulation Authority (APRA) has reported that 96 trustee-directed products failed to meet the benchmarks of its 2023 superannuation performance test.

The test was expanded to evaluate the performance of 805 trustee-directed products this year. APRA noted that 20 of the 500 non-platform products and 76 of the 305 platform products assessed failed to meet the benchmarks.

Seventy-five per cent of failed trustee-directed products were concentrated among four trustees: N M Superannuation Proprietary, Nulis Nominees (Australia), Oasis Fund Management, and OnePath Custodians.

Among the non-platform products that failed is Australian Retirement Trust’s QSuper Socially Responsible product, three products offered by ClearView Retirement Plan, three by Crescent Wealth Superannuation Fund, and five by OneSuper.

Platform products that failed included 17 investment options offered by MLC Superannuation Fund, four options offered by IOOF Portfolio Service Superannuation Fund, 16 by Oasis Superannuation Master Trust, among others.

MySuper products were also tested for the third year in a row, with one out of a total of 64 products assessed receiving a fail.

The one in question was AMG Super, which has been closed to new members since 2022, and which failed for a third consecutive time. APRA noted that the trustee has plans to cease the product.

“The annual performance test remains a powerful tool to help APRA hold trustees to account for product performance, fees, and costs,” said APRA deputy chair Margaret Cole.

“Since its introduction in 2021, nine underperforming MySuper products have exited the market and a total of 800,000 members, with combined assets of $39 billion, have moved to better-performing products.”

Ms Cole also acknowledged that evaluating performance among choice products was more nuanced than for MySuper products.

“Members in trustee directed products make active decisions about their investment options and some might select products for reasons beyond performance,” she said.

“Nevertheless, all trustees must take responsibility for the products they make available and ensure the products they offer are in their members’ best financial interests.”

APRA also reported that the median administration fees and costs for platform trustee-directed products were the highest at 0.54 per cent of assets, compared to 0.27 per cent for non-platform trustee-directed products and 0.26 per cent for MySuper products.

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.