The financial regulator has named five superannuation funds that failed its annual performance tests, and four of these funds will no longer be able to accept new members.
The Australian Prudential Regulation Authority (APRA) on Wednesday released the results of its annual testing of 69 no-frills MySuper products, which account for a total of 13.7 million superannuation accounts.
APRA said a MySuper product provided by Westpac-owned BT, a Westpac staff fund, and products from the Australian Catholic Superannuation Retirement Fund, Energy Industries Superannuation, and AMG Super had all failed the test.
With the exception of the Westpac staff fund, the other four that failed the test have now been closed to new members as a result of the APRA policy, which requires funds to close to new members if they fail the test two years in a row.
The largest fund that has been forced to close to new members is the BT MySuper fund.
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Westpac’s fund, BT, Australian Catholic Superannuation Retirement Fund and Energy Industries Superannuation have all announced plans to merge with rivals. In total, APRA said funds with 559,000 member accounts had failed the performance test for the second year in a row.
APRA member Margaret Cole said the performance tests, which were introduced last year, were driving better results for members by pushing funds to cut fees to improve members’ total returns. She said 38 per cent of people in MySuper products were paying lower fees than they were last year.
“This is the culmination of APRA’s intensified supervisory approach, driving trustees to take meaningful action to improve member outcomes. APRA encourages superannuation trustees to continue to explore ways to improve the efficiency of their MySuper products,” Cole said.
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