The Australian Prudential (LON:PRU) Regulation Authority (APRA) has published the results of its 2024 superannuation performance test, revealing that for the first time since the test's inception, all MySuper products have passed.
The assessment, which reviewed 57 MySuper products and 590 trustee-directed products, highlighted that the MySuper products, encompassing 15.7 million member accounts and nearly $1.1 trillion in assets, all met the required benchmarks.
This marks a significant improvement since the inaugural test in 2021 when 13 products failed the test, while five products failed in 2022, and one in 2023.
However, the results were less favourable for trustee-directed products within the Choice segment. APRA reported that 37 out of 192 platform products failed to meet the test benchmarks, with 27 of these products failing for the second consecutive year, leading to their closure to new members.
Notably, 36 of the 37 failed products were linked to NM Superannuation Proprietary Limited, with one associated with IOOF Investment Management Limited.
In contrast, none of the 398 non-platform trustee-directed products failed to meet the benchmarks. This stands in stark contrast to last year, where 76 platform and 20 non-platform trustee-directed products did not pass the test.
“This year’s results demonstrate the progress being made to address underperformance,” said APRA deputy chair Margaret Cole.
“We also note that trustee activity to eliminate underperforming products, through the consolidation, restructuring or withdrawal of investment offerings, has contributed to a sharp decrease in test failures by trustee-directed products.”
The Financial Services Council (FSC) CEO Blake Briggs urged consumers to seek financial advice before adjusting their investment strategies. He acknowledged the importance of testing and transparency but voiced concerns over the test's application to Choice products, particularly those where consumers have made decisions based on tailored financial advice.
“A key concern is that the platform investment options included in the test are misclassified as ‘trustee-directed’, when the trustee has no control over the strategic asset allocation and investment decisions relating to them.
"These products should not be included in the test, and the consequences to consumers should be front of mind,” Briggs said.
Briggs further criticised the government for not implementing product rationalisation reforms, which he argued has left Australians "trapped in legacy superannuation products" that are subject to performance testing despite being closed to new members. He asserted that these reforms could potentially increase retirement income for Australians by $21 billion.