Superannuation regulator APRA will issue notices to the trustees of eight superannuation funds requiring these trustees to provide information to APRA in relation to the underperformance of some of their MySuper products and the actions being taken to address that underperformance.
APRA said the eight trustees may have failed in their obligations to members in relation to 10 separate MySuper products, which means they could possibly have breached the Superannuation Industry (Supervision) Act 1993.
“We are concerned that some funds identified as the poorest performers 12 months ago remain in that position today,” Helen Rowell, Deputy Chair of APRA said in a comment on the publication of the new heatmap today.
Once the information that the eight trustees must provide is received, APRA will then review and determine what further action it will take, including potential use of formal enforcement powers where appropriate, it said.
We are concerned that some funds identified as the poorest performers 12 months ago remain in that position today
It has been a year since the first heatmap was published and Rowell said it had demonstrated its value in holding trustees publicly accountable for the performance of their products and the outcomes they deliver to members.
“The MySuper product heatmap shines a light on those trustees who are failing their members by charging high fees and not delivering good long-run returns,” Rowell said.
“The impact has been immediate in the area of fees and costs, with MySuper members saving hundreds of millions of dollars in fees since the release of the first heatmap.
“And despite an immensely challenging year with COVID-19, more than half of MySuper products exceeded our investment benchmarks over six years,” she said.
APRA estimated that over the 12 month period since the first heatmap was published $408 million in total fees and costs had been saved, while 71 per cent of MySuper members, about 10 million members, are paying less in total fees and costs.
Furthermore, 11 of the MySuper products that underperformed the investment benchmarks have exited the industry.
APRA included an appendix in an Insights Paper on the heatmap that lists the products and funds that were wound up since the first heatmap was published, although the regulator also included the wind-up of Club Super, which took place in October 2019, well before the first heatmap was published.
[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.