The latest superannuation performance test results have shown improvements, but four in 10 trustee-directed products continue to exhibit “significant investment underperformance”, warns APRA.
APRA has released the 2025 superannuation performance test results after assessing 563 superannuation products.
For the 2025 year, all 52 MySuper products and 374 non-platform trustee-directed products passed the test.
Seven of the 137 platform trustee-directed products failed the test for the year. This was a reduction from the previous year, when 37 failed the test.
APRA noted there were a small number of platform trustee-directed products that only passed the performance test because rebates were applied.
“While this benefits members, APRA will engage with relevant trustees to reinforce the expectation of sustained performance improvement,” the prudential regulator said.
Consistent with previous years, APRA said the results showed underperformance across trustee-directed products offered on platforms.
While these products provide members with wider investment options and flexibility, APRA stated that over 40 per cent of them, based on a 10-year performance history, exhibit significant investment underperformance.
Three trustees responsible for this year’s seven failed products included:
- N.M. Superannuation Proprietary Limited, with four failed products (including three consecutive failed products).
- I.O.O.F. Investment Management Limited, with one failed product (consecutive failed product).
- Bendigo Superannuation Proprietary Limited, with two failed products (first-time failed products).
Responding to the failure of one of its products, Insignia Financial noted that the one trustee-directed product to fail the test out of its 110 master trust and wrap options had been closed since March 2024 and had only 128 superannuation members.
“Insignia Financial has delivered strong investment performance across our MySuper and Trustee Directed Products (TDP) non-platform and platform investment options, and is pleased that all MySuper and TDP non-platform have passed the 2025 Performance Test,” it said.
Following the conclusion of the three-day roundtable event this month, Treasurer Jim Chalmers said the government would review the superannuation performance test to ensure there are no unnecessary obstacles or impediments to institutional investors, such as super funds investing in areas like housing.
This has been welcomed by a number of industry associations, including the Association of Superannuation Funds of Australia.
ASFA CEO Mary Delahunty said the review will build on the test’s success in keeping members in well-performing funds, while giving trustees greater scope to diversify and innovate their investment strategies.
Speaking at the opening of the ASFA Investment Summit, she emphasised that strong measures of performance are essential in a compulsory super system.
“It is crucial that in a compulsory system, we have measures of performance,” Delahunty said.
“The performance test has been an important part of the way super does business for half a decade now. It exists as a tool to help members make good decisions about where to put their money and to ensure that underperformance can be dealt with at a system level.”
AMP calls for overhaul of test following product failures
Following the failure of four of its N.M. Superannuation products, AMP has criticised the way in which the test applies to investment products on superannuation wrap platforms.
AMP Group executive, platforms, Edwina Maloney, said the current test was fundamentally flawed and in need of urgent reform.
“The test covers just 3 per cent of the platform market, causing distorted and misleading results, and potential consumer harm,” said Maloney.
“The test risks pushing superannuation members out of investment products which are meeting investment objectives and into more expensive, untested or potentially riskier products.”
She gave an example of members potentially losing access to capital guarantee solutions specifically chosen to provide protection against market volatility.
“In its current form, the test also imposes an unnecessary layer of red tape and regulation for advisers, which only leads to detrimental outcomes for their clients and undermines the value of professional advice,” she said.
“We welcome the Treasurer’s recent openness to reviewing the test, and we are actively working with Treasury to make it more fit for purpose, including recommending a more representative benchmark that encompasses all platform products.”
Low failure rate raises important questions for future of test
Gilbert + Tobin partner and head of superannuation practice, Luke Barrett, noted that while the test was designed to weed out performance laggards, it no longer appeared to be catching any, with all MySuper products and all non-platform trustee-directed products passing the test.
Barrett noted it was the second year in a row that not a single MySuper product or single choice product offered by a traditional fund failed the test.
“Does this mean that basically all of the laggards have been weeded out already,” he questioned in a recent LinkedIn post.
It also raises questions around whether there is still a need for a performance test and whether performance has simply lifted across the board.
Barrett noted there had been discussion around the flaws in the test and whether rules around stamp duty disclosure discourage property investments.
