Sticking with a poor-performing super fund can lead you to retire with hundreds of thousands of dollars less. Each year, the Australian Prudential Regulation Authority (APRA) analyses the super funds in the market and names and shames those that have performed the worst.
If you're in one of these funds, you're encouraged to compare super funds and switch to another fund with better returns.
Here are the 5 worst-performing super funds in 2022, according to APRA:
Of these 5 funds, Westpac failed the performance test for the first time in 2022 while the remaining 4 funds have failed for 2 years in a row. The 4 funds that have failed 2 years in a row are now closed to new members, and existing members will be transferred to another MySuper product.
Unless indicated otherwise, the information in the table is based on data provided by SuperRatings Pty Limited ABN 95 100 192 283, a Corporate Authorised Representative (CAR No.1309956) of Lonsec Research Pty Ltd ABN 11 151 658 561, Australian Financial Services Licence No. 421445.
*Past performance data and fee data is for the period ending Apr 2024
These funds have been determined the worst-performing funds by industry regulator APRA as part of its annual analysis of super returns. These 5 funds all delivered poor investment returns for members.
As part of APRA's Your Future, Your Super legislation, which aims to improve retirement outcomes for Australians, the regulator will be looking at how super funds are performing each year. It'll publicly name the worst-performing funds annually, so members have an opportunity to switch to a better-performing fund.
The first year APRA released this list was 2021, and the results are listed below.
APRA looked at the performance returns on 69 MySuper products for its 2022 analysis. It assessed the funds that had at least 5 years' worth of performance data and excluded the few new funds that haven't yet had enough time to show medium- to long-term returns.
MySuper funds are the default products offered by super funds when you join. They're designed to be a simple, diversified investment option with fees that aren't too high or too complex and to be suitable for the majority of members regardless of age. The reason APRA only looks at MySuper products when putting together its list of worst funds is that these products are where the vast majority of consumers have their super invested.
While the majority of funds APRA looked at (95.6%) met or exceeded their performance objective, 5 funds failed to meet their benchmark performance and under-performed. These 5 funds make up the list of the worst super funds above.
If you're not with one of the 5 funds listed above, it doesn't necessarily mean you're not with a bad super fund. It's still important to compare super funds to make sure you're not getting stung with high fees and poor returns.
There are 2 main ways to tell if it might be time to switch:
Your fund charges high fees: If you're paying annual fees that are 1.5-2% of your account balance, this is considered to be high. For example, if you've got a balance of $30,000 and your annual fees are $600, this is a fee of 2% which is higher than many funds in the market.
Your fund delivers poor performance: Many of the top-performing super funds achieve average returns over 9% p.a. If your fund is delivering returns much lower than this, for example 4% or 5% p.a., this is quite low in comparison. However, the type of fund you're with will impact investment returns. If you're in a more conservative portfolio, you can expect lower returns over the long term.
Being in a poor-performing super fund can have a huge impact on your super balance when you retire. It might not seem like a big difference early on, but the more your super grows and benefits from compound growth over your working life, the bigger the difference will be.
Example: Poor-performing fund vs high-performing fund
Let's say you're 25 years old, earning $80,000 a year and have a super balance of $20,000. Assuming your income stays the same until you retire, here's the super balance you'd have at retirement with different performing super funds, according to MoneySmart's calculator.
| Your super fund's performance p.a. until you retire | Your balance at retirement |
|---|---|
| 5% p.a. | $367,197 |
| 7% p.a. | $539,211 |
| 9% p.a. | $818,833 |
As you can see, switching from a super fund that earns 5% p.a. to one that earns 9% p.a. can help you retire with more than double the amount of super. That's a lot of extra money for simply switching from a poor-performing fund.
Remember, past performance doesn't guarantee future performance. When looking at a fund's performance, make sure you look at long-term returns (over 10+ years) instead of the most recent year's return on its own.
If you're with one of the worst-performing super funds that APRA names on its list, you'll receive an email or letter from your super fund. The fund is required to tell you it has failed the performance test and encourage you to compare super funds.
According to APRA, a few months after it published its 2021 list of worst super funds, only 7% of members in one of those funds had actually switched their super. APRA said this was concerning, as it meant people would retire with less.
If you're in a bad super fund you should do the following:
Even if your super fund isn't named as one of APRA's worst-performing funds, it's never a bad time to compare how your fund is doing against others.
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Use our free superannuation calculator to see your projected retirement balance, and how this could change by switching funds.
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My super fund on 11th September I owned 8056877610 units at 5.2094.Then on the 24th September I owned 8087927837 units at 5.2094.Then on the 30th of September I owned 8082022429 units at 5.1832.My question is I am contributing all the time this is the second time my units have gone down how can this happen I understand the unit price goes up and down but the units I buy should go up?
Hi Dale,
This question would be best directed to your super fund as they would be able to explain the performance of your fund, fees, insurance, etc.
Hope this helps,
Elizabeth
Im 71 started 10 years ago a Balanced Superfund thru Westpac (which are on the Unperforming List)- they keep moving and changing company names on my Superfund -right now I think I’m in a Pension Fund. My fund has no movement or preformance in recent time. Im not sure how and when my superfund went from balanced to pension.My question is does a ‘pension fund’ just gets parked somewere with no movement or earnings until the fund runs out of money –
because thats how it seems to be playing out. Your explaination would be gratefully appreciated.
Hi Ryan, pension funds operate in different ways depending on how you’ve got it set up. I’d recommend you speak to the fund directly to understand how your account is set up, or alternatively a financial adviser can look at your super and pension account and make recommendations for you.
Thanks,
Alison.
I currently have an Allocated Pension which isn’t perfforming. Can i withdraw and change to a super account if I am 80 yrs old
Hi, there are limits that restrict you from opening and making contributions to a super fund after you’re 75. I’d suggest you speak with a financial adviser who can offer advice based on your personal situation.
Is it normal that my total amount of employer super contributions over the past 10 years is more than the amount that my super balance has increased in 10 years?
Hi John, this depends on a number of factors including what investment option you’re in, how your fund has performed, what your insurance costs and other fees are. I’d suggest speaking with a financial adviser who can give you personal advice on your super.
I currently am receiving my monthly super payments but I am not able to get help from my super fund as to how to invest and I lost a considerable amount in 2022. I need independent advice. Someone to look at my portfolio and direct me. My Super is currently One Path. Insignia Financial.
Hi Emilio,
We are not licenced to provide personal financial advice regarding your superannuation investments. It might be worth contacting a financial planner for advice, and we also recommend contacting your super fund – if they can’t offer personal advice, they should be able to give you some guidance on your options.
Hope this helps!