APRA warning: Don’t stick with an underperforming super fund
If you've received a letter from your super fund telling you it has underperformed, don't ignore it.
Industry regulator APRA published its list of the 13 worst performing super funds back in August. The list contained the MySuper funds (these are the default option for members), that failed their performance benchmark.
As part of the new Your Super, Your Future legislation, the funds that are named and shamed also need to inform all their super members that they've performed poorly. The funds must also encourage members to compare super funds and switch to a better performing fund.
However, only 7% of Australians who were in one of these poor performing super funds have actually switched their super. This means the vast majority of people in one of the worst performing super funds are still with that fund.
APRA is working with the trustees of the funds that failed their performance test to act in the best interest of members. However, the regulator said consumers need to take their retirement savings into their own hands by actively engaging with their super and switching.
"Research shows that the difference in outcomes between a top product and an underperforming one can amount to hundreds of thousands of dollars over a working life," said APRA executive board member Margaret Cole.
"The vast range of products and options on the market can make the idea of trying to choose a new fund seem overwhelming, but there has never been more information available to consumers to help them make informed decisions about their super."
It's easy to switch super funds
Last month Finder spoke with Sydney-sider Ben who escaped a poor performing super fund a few years ago. His super fund was set up by his first employer, and when he checked it years later he found it was delivering poor returns and charging high fees.
Ben said the process of switching funds was surprisingly simple.
"I just looked up the top performing super accounts for the last 10 years. AustralianSuper was the winner by most accounts. I switched over to them and consolidated my super accounts with them. This took me no longer than an hour to do."
Once you've picked your fund and joined, your new fund will contact your old fund and organise for your balance to be rolled over for you. Most of the work is done by the super fund, not you.
If you do want to switch, check out the best super funds over the last decade and our step-by-step guide on how to change super funds. And remember, you can use the Finder app to track your super accounts.
