Superannuation shame: 4 dud funds that could cost Aussies a happy retirement

The roll of superannuation shame is out and there are four funds that, if you are still a member, could cost you your retirement.Every year since 2021, the Australian Prudential Regulation Authority (APRA) has put super funds through their performance paces – and awarded them ‘performing’ or ‘underperforming’, in a pass or fail test that serves as a vital warning to members.

Four have been deemed unacceptably bad… and Aussies, en masse, are taking urgent evasive action. Exclusive data given to Yahoo Finance reveals a total of 800,000 members have now fled dud funds since APRA’s performance test was introduced.

They’ve proactively switched a combined $39 billion to one of the many ‘performing’ funds.

But what about you? Is your retirement safe?

Don't let your retirement nest egg vanish by remaining with a dud super fund. (Supplied)

Underperforming superannuation funds

Under the Your Future Your Super legislation, every year APRA tests whether there are funds that have underperformed their relevant benchmark by 0.5 per cent or more a year, over an eight-year period.

The test is generally applied to MySuper products; the simple ones with a straightforward investment approach that an employer would put you in if you didn’t choose a fund yourself.

Products that fail two years in a row must be closed to new members.

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And, yes, there have now been four that have failed at least twice.

But even though these dud funds have been closed to new members, existing members can usually remain... and could see their super dangerously wane.

You need to make sure you are not one of the few remaining members.

The funds that have to date been named and shamed as serial under performers are:

• EISS Balanced (MySuper)

• BT Super MySuper

• Australian Catholic Superannuation and Retirement Fund's LifetimeOne

• AMG MySuper.

While the first three failed the performance test in 2021 and 2022, AMG has now failed three times – 2021, 2022, 2023.

But it still appears on an important database of possible funds, though it is listed last and designated as ‘underperforming’.

Which is the best-performing superannuation fund?

You can see all simple super products, ranked on nine-year returns by default, at the ATO’s tremendous super search tool here.

There are 63 products that make the grade for members (in 2023, APRA began testing diversified balanced and growth options run by the fund's trustee, known as trustee-directed products, as well as MySuper products).

These have either achieved a rating of ‘performing’ based on the benchmark or don’t have enough performance history yet to be judged.

The test considers products with at least six years of investment history and considers up to nine years of data where available.

In a further positive development, members now have even more insight into the pedigree of their super funds.

APRA released an additional, comprehensive package of product performance data and insights in November last year; this will be released annually soon after the performance test, which is usually in August.

“As part of the transition, APRA replaced the 2023 heat maps with an insights paper on product performance as well as data on performance metrics and industry fees,” the regulator told Yahoo Finance.

But there was a seriously sobering line buried in this extra fund analysis:

“While most MySuper products and non-platform trustee-directed products are outperforming the investment component of the performance test, more than half of all platform trustee-directed products are failing to meet the benchmark.”

There are far from just four funds not delivering for members. Check yours at the Australian Taxation Office website here.