1 September 2021
James Kirby – Wealth Editor
The government’s debut list of dud superannuation funds offers key pointers to the realities of how your money may be managed in our compulsory system
Not a moment too soon the government has published a long-promised super fund performance table: Specifically the recent outcomes at 76 default ‘MySuper’ funds where 13 funds have failed to reach industry standards. It’s a landmark for super and the scheme is only going to get bigger and better. Here’s what we found out:
1. Brand names mean nothing.
Some of the worst performing funds among the 13 dud funds have been offered by the biggest names in the game. Remarkably, a wing of the nation’s biggest bank is here, the Commonwealth Group Super – Accumulate Plus Balanced fund. Similarly, BT – an operation at the heart of the financial services system and a wing of Westpac – is smack in the middle of the sucker list with Retirement Wrap – BT Super MySuper.
Don’t assume a well known name automatically offers a strong fund.
2. There are losers among both retail and industry super funds
Industry funds are the big winners in our super system over the last decade – especially since the Hayne Royal Commission humbled the big banks and insurance groups. But the new ‘shame file’ has both retail names such as Colonial First State FirstChoice Super Fund along with industry funds like the Maritime Super (MySuper Investment Option) and the LUCRF (Labour Union Co-Operative Retirement Fund) MySuper Balanced fund.
3. Savers inside these funds need to be rescued
The government hopes funds which have been cast among the dud list will improve their game or get taken over by larger entities: This might be wishful thinking. A fund that has lost the confidence of the wider market will find it hard to regain momentum. Meanwhile, though large funds might cherry pick among the losers, there is no guarantee the worst funds will be acquired by bigger operators – there will need to be further incentives to get these dud funds to pack it in.
4. Loser funds always say the same thing
Some years ago when it was extremely difficult to compare super funds The Australian – using figures from the prudential regulator – published an extensive performance table of super funds. For weeks afterwards the worst performing funds complained loudly that the cut off point for performance was unfair. Others claimed that they had done wonderfully well since the day the regulator closed off the exercise, etc. The funds at the bottom of this week’s list are offering very similar explanations in their defence.
5. The comparison tables are free and easy to understand
The Australian Taxation Office has managed to present the performance figures very simply for free to anyone who accesses the tables through the MyGov website using their personal username and password.
Using the system on its debut day, the tables divide the funds between ‘performing’ and ‘underperforming’ – with a very useful 7-year net percentage return and fees comparison attached. What’s more there was no delay, crash or waiting time … hats off!
6. Some funds did not present their numbers
Even among the 76 funds that are examined, the regulator discovered that essential numbers were ‘not available’ among several funds which means an investor cannot make a full assessment: Here’s the funds – Mercer Super Trust (Virgin Money MySuper), Mercer Super Trust (Mercer Tailored CRG MySuper), Super Directions Fund (Water Corporation MySuper), the Retirement Portfolio Service- ANZ Smart Choice Super for QBE Management Services, Australia Post Super Scheme, and Australian Defence Force Super Scheme. For its part Mercer notes the performance test requires more than five years of data, and these two Mercer funds have existed for less than five years. Mercer notes that APRA’s separate assessment has the two funds listed as ‘Pass’.
7. It’s not perfect, but it will do for a start.
There are many failings in this exercise: Splitting funds into ‘performing and underperforming’ is simple and uncomplicated but then the process does not fully account for risk weightings or any scoring on the basis of Environment Social or Governance (ESG) considerations.
This is powerful public shaming: But more than a million investors may now realise they are in dud funds and on that basis alone the means should justify the end.
AMG Super – AMG MySuper
ASGARD Independence Plan Division Two – ASGARD Employee MySuper
Australian Catholic Superannuation and Retirement Fund – LifetimeOne
AvSuper Fund – AvSuper Growth (MySuper)
BOC Gases Superannuation Fund – BOC MySuper
Christian Super – My Ethical Super
Colonial First State FirstChoice Superannuation Trust –
Commonwealth Bank Group Super – Accumulate Plus Balanced
Energy Industries Superannuation Scheme Pool A – Balanced (MySuper)
Labour Union Co-Operative Retirement Fund – MySuper Balanced
Maritime Super – MYSUPER INVESTMENT OPTION
Retirement Wrap – BT Super MySuper
The Victorian independent Schools Superannuation Fund – VISSF Balanced Option (MySuper Product)