Its official. 21 out of 77 MySuper products are regarded as underperforming, according to the Federal Treasury.
What is more, Treasury has told a Parliamentary Committee that those 21 funds held over $100 billion in assets across three million accounts and charged $1.2 billion fees.
Treasury’s harsh assessment has been revealed in an answer to a question on notice to the Senate Economics Legislation Committee review of the Government’s Your Future, Super legislation with the department’s answer implying that many fund members were being kept in the dark about the relative under-performance of their funds.
“Under the current system, the members holding those accounts receive no notification that they are in an underperforming fund, and there is no trusted source of information for them to make their own informed judgements,” the Treasury answer said.
“There is also no prohibition today on a persistently underperforming fund receiving contributions from new members. Under the Your Future, Your Super reforms a fund that fails an objective performance based test in any one year will need to inform their members of that underperformance and be listed as underperforming on the YourSuper comparison tool until their performance improves,” the Treasury answer said.
“Funds that continue to underperform and fail two consecutive annual underperformance tests, will not be permitted to accept new members. These funds will not be able to re-open to new members until their performance improves. Every year that a fund underperforms they will need to continue notifying their members.”
The Treasury also gave a significant plug to other facets of the Government’s legislation arguing that “superannuation that follows you, by removing the problem of multiple unintended accounts, will lead to an aggregate increase of superannuation savings of $2.8 billion over 10 years”.
“More members making informed decisions about their superannuation and increased engagement via the YourSuper comparison tool will provide an additional benefit of $3.3 billion over 10 years. By improving underperformance, superannuation balances will be $10.7 billion better off over 10 years. Less waste of members’ money through greater transparency and accountability will boost members’ savings by around $1.1 billion over 10 years.”
