The Albanese Government has raised the standard of superannuation performance, backed by new analysis that shows a lift in member outcomes.
Today, the Australian Prudential Regulation Authority (APRA) has released detailed analysis of the 2023 performance test. The report highlights the positive effects of the performance test, while revealing that a majority of platform ‘trustee‑directed products’ (TDPs) are falling below their investment benchmarks.
This result confirms the importance of the Government’s decision this year to extend the coverage of the performance test to TDPs in the choice sector.
The superannuation industry has been very successful in growing the retirement savings of workers. The superannuation system has grown to $3.6 trillion in assets – the fourth largest pension system in the world.
However, every day that Australians languish in underperforming products leads to lower retirement incomes. The performance test holds trustees to account for their investment decisions with member funds. It also ensures that members have transparency over the performance of their superannuation fund.
Since 2021, the performance test has covered around 70 products. This year, the Government extended the test to an additional 800 products, representing around 4 million member accounts.
Key findings of the APRA report of the 2023 performance test include:
- Over 80 per cent of member accounts in both MySuper and non‑platform TDPs outperformed their investment benchmark.
- Only 44 per cent of member accounts in platform TDPs outperformed their investment benchmark.
- Around 30 per cent of platform TDPs would fail the performance test if they charged the median fee for platform TDPs.
Trustees must reflect on these results and implement improvements to demonstrate the value they provide to their members. Products that fail the performance test in consecutive years are closed to new members until they pass a future test.
These insights demonstrate the Government’s commitment to greater transparency across the superannuation industry, which leads to better outcomes for members.
The APRA Insights paper is available on the APRA website.
