LOOK BEFORE YOU LEAP
MySuper funds have just been tested for fees and investment performance, and 13 have been slapped with a “fail”.
Is yours among them? Superannuation watchdog APRA has delivered its verdict on the performance of the nation’s 80 MySuper accounts.
These are the default funds designed to provide low fees and basic levels of insurance.
If you haven’t given your employer instructions about which fund you’d like the boss’s compulsory contributions paid into, it’s a fair bet your retirement savings are in a MySuper product.
APRA reviewed the funds as part of the Your Future, Your Super reforms introduced in the 2020-21 federal budget.
It will be an annual event, and undoubtedly one super funds won’t look forward to.
If a MySuper fund fails APRA’s test, it is required to write to members by the end of September, and suggest they take their money elsewhere.
On the plus side, only 13 MySuper accounts have been assessed by APRA as “underperformers”.
But you don’t have to wait to hear from your fund to know if your super account failed the test. The Tax Office website has a YourSuper comparison tool that shows which funds performed and which underperformed, and shows the fees and investment returns.
Before bailing out of an underperforming fund, there are a few things to consider. APRA’s performance test is complex. In particular, it looks at the fund’s performance in relation to its investment strategy.
So some funds that failed delivered much higher returns than others that passed. This is why it makes more sense to look before you leap. It’s worth checking the returns your fund has notched up over time, then how it compares to others.
The YourSuper tool allows you to do this and get an idea whether your fund is a chaindragger on returns or if it charges relatively high fees.
Switching to a new fund can be good if it helps you enjoy a bigger nest egg, however, it means selecting a fund, transferring your super savings to a new one, and your letting your boss know the details of the new fund.
So take the time to be sure you’re happy with a new fund – or are still comfortable with your old one.