Australia’s worst-performing super funds

When saving for your retirement you’ll want to make sure your money’s not invested in any of Australia’s worst-performing super funds. But how do you know if your superfund is underperforming, and what can you do about it?

The Australian Prudential Regulation Authority (APRA) keeps a regular watch on the performance of the super industry and publishes its annual MySuper Heatmap.

A MySuper account is usually the default option offered by a super fund and the APRA heatmap allows you to see how a particular product is performing against a benchmark, and whether it’s passed or failed.

The MySuper heatmap was first published in 2019 and by December 2022 APRA said 28 products had closed, with 1.5 million member accounts (containing $51.6 billion in member benefits) transferred to other products.

APRA’s Deputy Chair Margaret Cole said the MySuper heatmap was an important tool for “eradicating unacceptable product performance”.

“Since its introduction, we have seen costs to members reduced, many underperforming products closed, and a drop in the number of members in funds with significantly poor investment performance,” she said.

APRA has also published a Choice heatmap for super accounts where you can select from a number of investment options with varying degrees of risk. You may even be able to select a mix of those options, depending on your fund. The last Choice heatmap was published in 2021 but an update is due this year.

Read more: Best-performing super funds

How do I check my super fund’s performance on the heatmaps?

MySuper heatmap

If you have a MySuper account, you can head to APRA’s MySuper heatmap. Use the selection boxes to narrow down the information displayed in the table.

The easiest way to check which products are failing APRA’s benchmarking is to select All in the Product type selection box, then select No in the Display stages of lifecycle products selection box, then the Fail option in the Pass/Fail indicator selection box, and finally select Metrics (concise) in the Metric to display selection box.

This will display a list of those products that have failed the APRA benchmarking test for seven-year returns. Check to see if your product is listed.

If it’s not listed, you can then select Yes in the Display stages of lifecycle products selection box, to show more accounts that have failed the seven-year benchmarking test and see if yours comes up.

We’ll explain later what you can do if your super is in a product that’s underperforming.

Otherwise, if your super product is not listed then you’re probably in one that’s passed the APRA test. So select Pass in the Pass/Fail indicator selection box to see if you can then find your product and check its performance. You may have to toggle between Yes and No in the Display stages of lifecycle products selection box.

You can now see how other super products have performed and compare those to your own.

If you can’t find your MySuper product in APRA’s heatmaps, you can contact your provider to confirm the name and details of your investment option.

Choice heatmap

If you have a Choice product things are a bit more complicated and you need to head to APRA’s Choice heatmap Remember, this was for 2021 but an update is due this year.

This time you’ll want to narrow down the search to your product, but first select Metrics (concise) in the Metric to display selection box, then select All categories in the Growth SAA Category.

Now in the Product selection box you should be able to locate your super product options from the list of available products. Depending on your super options, there may be several products that relate to your choice. If your options are not listed, contact your super provider.

The thing to look out for here are any blocks below the header row that are coloured other than white. Any colour from pale yellow to deep orange indicates something is not performing as APRA would like. The darker the colouring the deeper the concern, and the more the heat is on for the product to improve.

Timothy Collins, a financial adviser at Talem Wealth, told Canstar the first column to look at was the for the seven-year net investment return, as that shows how the product has performed over a significant period. The next column shows how that performance compares to APRA’s benchmark.

If all is white then your super account is probably doing okay. If things show up in colour, Collins said you should consider talking to your provider to find out why your super is underperforming.

“If your super is consistently underperforming then you need to ask your provider some questions on why it’s been underperforming and what action it’s taking to improve things,” he said.

What to do if my super is underperforming?

If you find you’re in one of the super funds found by APRA to be underperforming you might want to consider your options.

But Collins cautioned against any knee-jerk reaction of simply changing provider.

Instead, he said you need to consider all your options and look at what fees or other costs may be involved by changing providers. You also need to talk to your super fund about your options and your risk profile, and what it intends to do about its performance.

Remember, past performance of a product doesn’t indicate future performance and you could find yourself moving to a product that is performing well now but may slip in future APRA benchmark testing.

If you have concerns, now may be a good time to seek some professional, independent financial advice.

APRA’s Margaret Cole said all super fund trustees should scrutinise the heatmap findings and take prompt action to address any areas of concern.

“APRA expects that trustees with underperforming products will consider options to transfer members or otherwise restructure their businesses, particularly where sustainability pressures are significant,” she said.

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