Did you receive a letter from your super fund telling you it has been underperforming? Don’t ignore it!
The Australian Prudential Regulation Authority (APRA) published a list of the 13 worst performing funds back in August. Of the nations 80 MySuper products, some of the industry’s biggest names have failed their performance benchmark.
What is a MYSuper Product?
Around 14 million Australian’s have their superannuation invested in a MySuper product. As a generalisation, if you didn’t nominate a fund for your employers’ compulsory super contributions to be paid into, there’s a good chance you’re in a default super fund which is most likely a MySuper product.
How do I know if my super is underperforming?
To encourage super funds to lift their game, the 2020-21 Federal Budget called for the introduction of annual performance tests to be conducted by superannuation custodian APRA. Funds that failed these performance tests must inform all their members that they’ve performed badly. They must also encourage members to compare their super funds and in turn, switch to a better performing fund.
Shockingly only 7% of Australian who were sent a letter to say their super was under performing have switched funds. APRA is working with the funds to act in the best interest of their members, but people need to take matter into their own hands and act quickly.
“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.”
What should I do about it?
Many people believe that switching superfunds is a confusing and time consuming process, but there has never been a better time to make the switch.
There are many resources out there for you to do your own comparisons and research, but it can become quite overwhelming rather quickly – meaning most of us end up throwing it into the ‘too hard’ basket and never actually doing anything about it.
Speaking with an expert who has done the research, analysis and comparisons can be extremely worthwhile. A financial adviser can clearly explain where your super can be better invested and how it will impact your future removing the guesswork for you.
A financial adviser can guide you through the process and look at your individual circumstances to find the best solution for you. A good financial adviser will know the industry inside out and understand there is no one size fits all approach when it comes to your super.
Small changes can make a huge difference to your retirement, so don’t procrastinate any longer. To find out more, book a consultation with one of our Compare Your Super – Superannuation specialists.