The Australian Prudential Regulation Authority (APRA) has released the results of the 2023 superannuation performance test. This annual test first took place in 2021 as part of a raft of reforms introduced by the previous Federal Government to improve returns from superannuation and to make the investment performance of funds more transparent.
For the first two years the performance test included only MySuper products. These are basic super products mostly used as default employer funds or by individuals who don’t want any special features like investment choice in their fund.
In 2021 (the first year of the test) 13 MySuper products failed. After a number of products merged or closed, in 2022 (the second year of the test) one MySuper product failed for the first time and four failed for the second time. In the 2023 test no MySuper products failed for the first time, but one has failed for the third time.
The 2023 performance test was expanded to include trustee directed products, where the trustee has control over the design of the investment strategy of the product. Typically this also allows the fund member some element of investment choice. Of the 805 trustee directed products tested, 96 failed. APRA has pointed out that 75% of the failed trustee directed products are concentrated in products offered by just four trustees.
Trustees of products that failed to pass the benchmarks must notify their members of the test outcomes by 28 September 2023. Trustees cannot accept new members into products that have failed for two consecutive years.
Further details of the performance test is available from the APRA website at APRA releases 2023 superannuation performance test results | APRA.