Superannuation chiefs warn on controversial new rating system
A tough new superannuation rating system that could spell the end for underperforming funds has been released, with industry chiefs warning Aussies not to overreact.
Every default superannuation product has been rated in a controversial new system which will see underperforming funds tossed out if they don’t improve.
The banking regulator, the Australian Prudential and Regulation Authority, today released its highly-anticipated heat maps which shines the light on the best and worst-performing default funds.
APRA’s deputy chair Helen Rowell said the classification of the MySuper products – those that customers default to if they don’t choose their own fund when they start a new job – will help single out funds that are performing poorly.
The release of the heat maps has also resulted in APRA working with funds delivering dismal returns to help improve their game.
“We directly contacted the trustees of the worst-performing products and asked them to provide or update action plans outlining how they will address identified weaknesses,” Ms Rowell said.
“If they are unable to make substantial improvements in good time, we will consider other options including pressuring them to consider a merger or exit to the industry.”
MySuper products account for nearly 60 per cent of all member accounts in Australia and the average balance held is $47,000.
The heat maps are the result of in-depth analysis of investment performance, fees and costs and sustainability over a three and five-year timeframe.
The heatmap has provided colour-coding for the key three areas from white through to pay yellow to dark red - red being the worst.
For fees disclosed on a balance of $50,000 the best included AMP Super at 0.5 per cent, ANZ Staff Superannuation Fund at 0.73 per cent and Meat Industry Employees Superannuation Fund at 0.79 per cent.
While for fees disclosed on a balance of $50,000 the worst included Pitcher Retirement at 1.93 per cent, Maritime Super at 1.71 per cent and FSS Trustee Corporation at 1.64 per cent.
The Association of Superannuation Funds of Australia’s chief executive officer Dr Martin Fahy has asked people not to overreact when examining the maps.
“We would urge caution in how people interpret both the returns and the fee data and recognise that in aggregate a large number of funds are delivering really strong returns over the last five years,” he said.
Dr Fahy also said: “We need to stop tinkering with the super system.”
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The maps analyse areas including fees administration and total fees on specific account balances including $10,000 and $50,000.
The heatmap are a starting point for industry stakeholders, policy market, advisers, employers and members so they can analyse the success of their retirement outcome.
Industry Super Australia’s chief executive officer Bernie Dean said the heat maps were a “good start” to helping consumers decipher the good and bad funds.
He said the same heat maps should be provided for all super products, not just default products.
BEST-PERFORMING FUNDS
1. Host Plus 9.65%
2. Gold Sachs & JBWere Super Fund 9.63%
3. AustralianSuper 9.48%
4. Max Super 9.37%
5. UniSuper 9.36%
WORST-PERFORMING FUNDS
1. Pitcher Retirement 5.85%
2. Energy Industries Super 6.19%
3. Maritime Super 6.23%
4. Christian Super 6.76%
5. Perpetual’s Select Super 6.77%
* Net five-year investment return per annum.
Source: APRA.
Originally published as Superannuation chiefs warn on controversial new rating system
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