APRA puts heat on super funds

EVERY default superannuation fund has been rated under a controversial new system designed to heap pressure on those that underperform.

The Australian Prudential and Regulation Authority released its keenly awaited heat maps, which show the best and worst-performing default funds.

APRA deputy chair Helen Rowell said the classification of the MySuper products — those that employees are given if they don’t nominate funds when they start a new job — will help single out poorly performing funds. The regulator is using the heat maps to help funds delivering dismal returns to improve.

“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 from the industry.”

MySuper products make up almost 60 per cent of all member accounts in Australia. The average balance is $47,000.

In its colour-coded heat maps, APRA scrutinised the performance of 410 funds, detailing investment performance, fees, and sustainability over three and five years.

The analysis was based on account balances of $10,000 and $50,000.

For net investment returns, the best-performing fund was the Hostplus balanced-option product, with an average annual return of 9.65 per cent over five years.

For fees disclosed on funds with a balance of $50,000, the best included an AMP Super product, at 0.5 per cent.