Within these there are two buckets. The first and by far the biggest are the modern pooled investment options offered directly by big super funds such as HESTA, Hostplus, Aware and UniSuper.
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These are widely used and together hold hundreds of billions of dollars. Both industry and retail super funds sit in this bucket, so you’ll see retail fund names such as AMP and Insignia alongside the big industry fund players.
Then there’s the second bucket, and this one matters because it’s where the poorest performers showed up in this year’s test: the platform funds. These are the adviser-linked platform products. These sit inside retail wraps such as AMP’s North/MyNorth and Insignia’s offerings, along with Bendigo’s investment menus. They’re older-style products, often prescribed by advisers years ago.
In total, these older style platforms ‘only’ hold about $19 billion, a fraction of the system compared with the $1.1 trillion sitting in MySuper defaults. But they matter because many of the people still in them are older advised clients, often stuck in products prescribed years ago that they haven’t thought to review and their adviser hasn’t flagged.
And those products are expensive, charging as much as double the fees of the big funds, while often delivering worse performance, according to the report. My call to action: if you’re in a legacy platform product, it’s time to look into how it stacks up and whether it’s still right for you.
There are several ways to make sure your super delivers the best bang for buck.Credit: Aresna Villanueva
So the test isn’t just about default funds any more. It’s now shining a light across much more of the market. But there’s a catch: the YourSuper tool you can use to compare still only lets you compare MySuper defaults. If you’re in one of the broader products, the results sit in APRA’s report, they’re not in the easy comparison tool yet.
The consumer win
For people still working and often tipping into super without a second thought, the test is a big win. It stops funds from quietly underperforming while still happily charging fees. And it allows you to go look for yourself at the high performers and the lowest fees if you’re considering a switch.
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It’s also forced fees down into a much tighter range. A few years ago, plenty of funds were charging north of 1-1.5 per cent in total costs. Today, most MySuper defaults are in the 0.2-0.4 per cent range for admin fees (on a $50,000 balance), and total costs on balances of $200,000 are far more competitive or even homogenous than they used to be at 0.67-0.75 per cent.
In other words, most default funds now sit in the same ballpark. You’re not likely to be gouged if you’re in a mainstream MySuper or big-fund choice option.
That convergence is a direct result of the public pressure created by APRA’s test. The regulator hasn’t just told consumers which funds are failing, it has spooked trustees into cutting fees and improving returns so they don’t end up on the naughty list.
Retirees: left in the dark
Here’s the part nobody talks about. If you’re retired – or even on the retirement runway – APRA’s performance test doesn’t apply to you. The test only measures how funds perform while you’re accumulating. It says nothing about how funds perform in the retirement phase, what fees you’ll actually face, whether they’ll deliver a steady income, or if they’ll make retirement simple or bury you in red tape.
That leaves retirees flying blind, with no government test pressing funds to lift their game. Many are still sitting in old platform products without even realising it, and those metrics aren’t published anywhere. The cost of that silence can be huge: tens of thousands of dollars less to spend across a retirement.
The performance test is brilliant at spotting who’s failing in the classroom. But once you graduate into retirement? The teacher’s gone home, and there’s no report card at all.
And that’s the real problem. Heading into retirement, it’s still crucial to keep an eye on whether a fund delivers solid returns and fair fees. But that’s only part of the story. It’s also about whether the fund makes dealing with your money simple or a bureaucratic nightmare. Whether it offers useful products and services for the retirement phase too. And whether it treats retirees as valued members or as an afterthought.
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And so, I remind you that I’ve stepped into the gap with the launch two weeks ago of the “epic retirement tick” powered by Chant West. The first announcement of funds delivering 12 out of 18 on our select in the retirement phase is on October 2.
The tick is designed to measure the things APRA doesn’t: yes, performance and fees, but also whether a fund has developed retirement income options, how easy it makes the retirement phase to understand and navigate, and the quality of support it offers once you stop working. Because retirement is different – the risks are bigger, the stakes are higher, and the questions go far beyond “did you beat the benchmark?” (Even though that’s still important.)
If APRA’s test tells you how funds perform when you’re putting money in, the tick will tell you how they perform when you need to draw it down and actually use the services they offer.
After all, the whole point of super isn’t just to build a big balance. It’s to fund a decent life when you stop working.
Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.
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