97 super products fail performance test

Of the 97 products to fail this year's superannuation performance test, 96 are trustee-directed products - 75% of which are issued by the same four trustees.

Released this morning, the 2023 performance test marks the first time trustee-directed products have been included in the test, with APRA assessing 805 in total. Of these 12% failed - but they represent 27% of the total funds under management in trustee-directed products both on and off-platform.

Of the 96 trustee-directed products to fail, 20 are non-platform products (4%) and 76 are platform products (25%).

Further, on-platform products represented just 5% of the total FUM assessed, 50% of which is in failed products. However, there were fewer on-platform products assessed.

Three-quarters of those that failed are issued by AMP, Nulis Nominees, Oasis Funds Management, and OnePath Custodians - Nulis, Oasis and OnePath are all Insignia Financial trustees.

Looking at trustee-directed products on platform, APRA assessed 305 in total. This represents 196,000 member accounts, 24,000 of which are in failed products. By FUM, of the $19 billion held in the 305 products, $2.3 billion is in those that failed.

The vast majority of the failed products are issued by either an Insignia or AMP trustee.

Super funds overseen by an Insignia trustee

Those overseen by an Insignia trustee include AvWrap Retirement Service MLC0398AU; IOOF Portfolio Service Superannuation Fund's OnePath Tax Effective WS Income Trust and Optimix WS Balanced Trust - Class A; MLC Superannuation Fund's Access Pre Select Growth, MLC Masterkey Unit Trust Horizon 4 - Balanced and MLC Wholesale Diversified Debt Fund; Oasis Superannuation Master Trust's MLC Wholesale Horizon 2 Income Fund, OnePath Wholesale Balanced Trust, and Optimix Wholesale Moderate (Class A); Premiumchoice Retirement Service's MLC Wholesale Inflation Plus - Assertive Portfolio and OnePath Tax Effective Income Trust; and Retirement Portfolio Service's OnePath Wholesale Balanced Trust and Optimix Wholesale Growth Trust (Class B).

Insignia's head of superannuation Mark Oliver says the results impact about 5000 members with about $350 million in savings - less than 1% of Insignia's total membership and assets.

"While this represents a small cohort of members, it is a disappointing outcome for them and we remain highly focused on delivering improvements whilst protecting members' interests in this process," he says.

"For example, our strategic initiative to migrate members (subject to Trustee approvals) to our contemporary Expand platform we anticipate will positively impact member outcomes and address some elements which have impacted this year's performance test results.

"Additionally, the investment teams under the proven leadership of our chief investment officer Dan Farmer, have been working through a simplification program, and the go-forward strategies are expected to improve the future performance of the investment options that have failed the test."

AMP

As for AMP, the products that failed sit within the Wealth Personal Superannuation and Pension Fund and include five of the Experts' Choice products, eight of the Generations products, seven ipac products, three North Guardian options, two SUMMIT Select products, and the MyNorth Dynamic Balanced Fund.

In response, AMP says the options that failed represent just 1.5% of the total FUM held by AMP in super and pensions. It added that all its MySuper options passed the test, as did the bulk of its trustee-directed products. Further, AMP noted that the bulk of the options that failed are legacy products that have been closed to new members for some time.

The other trustee to have failures in this cohort was The Bendigo Superannuation Plan which had its Bendigo Growth Wholesale Fund and Bendigo High Growth Wholesale Fund fail.

Turning to non-platform trustee-directed products, 500 were assessed in total, comprising $341 billion in FUM and 3.8 million member accounts. The 20 products that failed house $1.7 billion on behalf of 36,000 members.

Here, there were two industry super fund options that failed - Australian Meat Industry Superannuation Trust's High Growth Super Option and Australian Retirement Trust's QSuper Socially Responsible. AMIST's product is now known as its Shares option, while ART says it will close this option next year.

Three ClearView Retirement Plan options were also failed, along with five products from OneSuper. Insignia also featured again here, with three of Retirement Portfolio Service's products failing.

Meantime, three of Crescent Wealth's four investment options failed, as did two from Smart Future Trust's smartMonday range, and Cruelty Free Super's Growth option.

Finally, corporate fund Citibank Australia Staff Superannuation Fund copped one fail, for its Bonds Plus option. As reported by Financial Standard this week, Citi has opted to terminate its staff super offering from next month.

MySuper products

APRA also found that on-platform trustee-directed products have the highest median administration fees and costs at 0.54% of assets, compared to 0.27% for non-platform trustee-directed products. MySuper products were just slightly cheaper again at 0.26%.

Just 6% of all dollars assessed were held in platform products, showing the majority of savings are held in other products.

Meantime, of the 64 MySuper products examined, only one product failed the test this year, being AMG Super. This marks the third consecutive year it has failed, leading it to exit MySuper.

All trustees must now write to the members within these failed products by September 28.

This article first appeared on Financial Standard

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