Super products that failed watchdog tests

Corrected 16 October: Australia’s prudential regulator has revealed the latest list of poorly performing superannuation products. In August, the Australian Prudential Regulation Authority (APRA) revealed that over 90 super funds had products that failed to meet its performance standards. It has now provided greater detail, naming the products that failed badly.

The APRA report found that 75 per cent of the failing products came under the umbrella of just four trustees. Those four are NM Superannuation Proprietary Limited, Nulis Nominees (Australia), Oasis Fund Management Limited and OnePath Custodians.

Based on APRA information, it was reported earlier that the worst performing super fund of all was the Alcoa of Australia Retirement Plan (AARP). That information was incorrect.

Alcoa has advised that the plan did not fail the APRA performance test for choice products for the 2022/23 financial year and had since received confirmation from APRA to that extent.

It also advises that a reference to -31 per cent returns for three products is inaccurate. An Alcoa spokesperson said: “I believe this has been based on a Financial Standard article rather than the data itself. The data in the report showing the large negative returns was only in respect of one product not three.

“We have also discovered that the data used by APRA was inaccurate and is being rectified.”

Alcoa says the Trustee decision to merge was anything but “scathing” as had been written. 

“The independent report was commissioned by the Trustee directors to ensure that they were and would continue to act in the best interests of their members,” the spokesperson said. “The decision to merge was based on this report which set out that, notwithstanding the plan could continue as is, as membership declined, the plan would face sustainability challenges over the next 18 to 24 months to keep costs at a competitive level and to compete with the large industry and retail superannuation funds.”

Funds that fell well short

The Financial Standard said funds swimming in “a sea of red” included One Super, Colonial First State, MLC Super Fund and the Citibank Australia Staff Superannuation Fund.

As trustee of numerous products, One Super oversaw a number of significant failures, including two Clime Smaller Companies products. These delivered returns of –24.3 per cent and –21 per cent.

One Super also managed several other big losers. These included Quay Global Real Estate-Daily Series and Aberdeen Australian Small Companies Fund (both returning –18.5 per cent).

On the surface of it, APRA’s annual performance tests appear to be achieving their intended aim. While they may deliver initial bad news to some super members, they should ultimately provide better financial results.

Are you or were you invested in one of the poorly performing super products? Do you think APRA’s performance tests are having the desired affect?  Let us know via the comments section below.

Also read: How to consolidate super fund accounts

Note: This article has been corrected to remove incorrect data that related to the Alcoa of Australia Retirement Plan and to Brighter Super.