Members who opted to remain in a superannuation fund which failed the Your Future, Your Super test lost $1.6 billion in 12 months, according to Industry Super.
There were around 850,000 members who remained in an underperforming fund and Industry Super research found those who didn’t switch to a top-performing fund lost an average of $1,900 per person.
If they stayed in the fund for 10 years, this would see a member with a $50,000 balance be $25,000 worse off.
In the 2020/21 test, 13 MySuper funds failed the test which affecting about one million members but this year, only five of those failed for a second time which affected about 600,000 members.
Funds that failed the test were forced to write to members, telling them to consider switching and directing them to a website where they can compare funds, but about 90% of members stuck with their existing fund.
Industry Super Australia chief executive Bernie Dean: “This is a reminder that there is huge cost to doing nothing if you are in a dud super fund. Lots of people don’t know you can be stapled to a super fund that has failed the government’s performance test, and that could punch a huge hole in a person’s nest egg.”
“Switching out of a dud fund and into a good one is easy, but plenty of people don’t think about it until it’s too late, so it is up to the Government to tighten consumer protections, so people are only stapled to the best funds that have passed the performance tests.”
Agree with Devil.s advocate,,,,,,,One year is too short a timeframe for a long term investor…….also depends on the risk profile of the fund……I would rather earn X dollars in a safe fund rather than 2X in a fund that invests in a risky portfolio and goes broke the following year.
What a financially illiterate article by the author. It has always been common sense not to chase the best performing fund for the previous year as it will end in disappointment. Buy sell costs and capital losses that cannot be carried forward have been omitted. The introduction of MySuper performance tests is absurd and the problem with it is that investors are ill informed.