The recently released annual MySuper Performance Test 2024 from the Australian Prudential Regulation Authority (APRA) provides a comprehensive overview of the performance of superannuation funds across the country. The test aims to enhance industry transparency and improve member outcomes by evaluating the long-term performance of superannuation products against specific benchmarks. Funds that do not meet these standards face consequences.
This year’s report is notable for several reasons, particularly the fact that no funds failed or were repeat fails for the first time since the introduction of this yearly testing. At First Financial, we understand that our clients are interested in the performance of Australian superannuation funds, as it can significantly impact retirement planning and financial decisions. Here are some key insights about the test and the results.
The test and its importance
The APRA Performance Test is a critical part of the Your Future, Your Super (YFYS) reforms, introduced to enhance transparency, efficiency and accountability in the superannuation sector.
Since 2021, this test has evaluated MySuper and Trustee Directed Products (TDPs) each year to ensure they are meeting performance standards in the best interests of Australians. Underperforming funds are flagged, and repeated failure can lead to restrictions on accepting new members. This ensures funds remain accountable and responsive to member needs.
This framework allows Australians to use the YourSuper Comparison Tool to make informed financial decisions. However, when it comes to your personal circumstances, seeking professional advice is always recommended.
Positive trends in superannuation fund management
Over the years, we’ve observed steady declines in administration fees, supported by the introduction of administration fee caps.
This reduction is great news for members, as more of their money is now being invested towards their retirement rather than being eroded by fees.
James Wrigley, Principal at First Financial, notes, “The drop in administration fees is a welcome change for super fund members. It means more of their contributions go towards building their retirement nest egg.”
Additionally, the performance of funds was tested over a longer timeframe this year, covering the last 10 years. This extended period allowed for a more balanced view of fund performance and smoothed out short-term market fluctuations, such as the market drops in 2015 due to events in China.
It’s good news for super fund stability
“This is the first time no funds have failed or been repeat fails,” remarks James. With no funds failing the performance test this year, the review highlights a positive trend in the superannuation sector, indicating improved stability. This stability is good news for all Australian super fund holders, as it suggests greater security and reliability in their retirement savings.
In previous years, we saw one fund fail in 2023, five in 2022, and thirteen in the inaugural test in 2021, showcasing a clear improvement over time. Enhanced regulatory oversight and competitive pressures have likely contributed to this outcome, promoting better fund management to protect members’ investments.
Superannuation and retirement planning in 2024
Superannuation can be the centrepiece of your investing, asset protection, tax and estate planning objectives, making it crucial to get it right. The annual APRA Performance Test details fund performances, helping individuals choose a well-managed option with low fees and a solid long-term track record.
It’s encouraging to see all funds passing for the first time in 2024. However, personal decisions should be based on your individual circumstances.
For tailored advice on maximising your superannuation, consider speaking to a professional financial adviser.
Talk to the retirement planning and superannuation experts
At First Financial, we’re dedicated to helping clients build wealth and achieve their desired retirement lifestyle. Superannuation is a key component of this plan, and our specialists can advise on the best options for your needs.
To learn more about the findings from the 2024 APRA Performance Test and how fund performance may impact you, contact a member of our team today. We’re here to support you on your pathway to wealth and a secure retirement.
Read more superannuation articles.
