The Australian Prudential Regulatory Authority (APRA) is calling on everyone with a superannuation account to actively engage with their super fund more to maximise their retirement futures.
The call follows new APRA data showing that only a small proportion of people whose MySuper products failed the Authority’s recent performance test have moved their savings elsewhere, despite receiving letters notifying them that their product was officially underperforming.
Executive Board Member at APRA, Margaret Cole said APRA released the results of its first annual performance test of products in August and, of the 76 products assessed, 13 failed and were forced to write to members notifying them of the result.
“APRA data collected from the 13 failed MySuper products shows that some members have acted on advice in the letter that they should consider moving their savings to a better performing product, however, it is early days,” Ms Cole said.
“From the one million member accounts in products that failed the test, fewer than 68,000 have been closed,” she said.
“That accounts for seven per cent of total accounts in the failed products, or only 4.2 per cent ($2.2 billion) of assets.”
Ms Cole said although APRA was working with the trustees of the failed products to ensure they urgently improved their performance, members had every right to consider whether they could get better outcomes elsewhere.
She said trustees of APRA-regulated superannuation funds had a legal duty to act in the best financial interests of their members and APRA was working hard to ensure they fulfilled that obligation.
“That’s not a reason for members to sit back and avoid taking steps to act in their own best financial interests by ensuring they are in a high-performing super product,” she said.
“Research shows that the difference in outcomes between a top product and an underperforming one can amount to hundreds of thousands of dollars over a working life.”
Ms Cole said the vast range of products and options on the market could make the idea of trying to choose a new fund seem overwhelming, “but there has never been more information available to consumers to help them make informed decisions about their super”.
“The best place to start is the Australian Tax Office’s YourSuper comparison tool, which incorporates the findings of the MySuper performance test, while useful information can also be found on the Australian Securities and Investments Commission’s (ASIC) MoneySmart website,” she said.
The ATO’s YourSuper comparison tool can be accessed at this PS News link and ASIC’s MoneySmart website at this link.
