Are you one of the hundreds of thousands of people stuck in an underperforming super fund?
This week the financial regulator, the Australian Prudential Regulatory Authority, revealed the five MySuper funds that failed its performance test.
While the performance test is currently only for default funds, the latest APRA data shows about 60 per cent of other funds are delivering poor returns too.
Here's what you can do.
First up, do a comparison
If you have a MySuper account (which is just a type of super account that you are defaulted into if you don't actively choose a fund) you can do a quick comparison using this ATO tool.
It will compare 69 different products including their annual fees, returns and whether they have passed the financial regulator's performance test.
The test was introduced last year as part of the federal government's Your Future, Your Super reforms.
"It's a good starting point for people to figure out where to put their money if they're looking to switch," Super Consumers Australia's Xavier O'Halloran says.
What if I don't have a MySuper account?
The federal government is currently reviewing whether to extend APRA's performance test to all super products.
Until that happens, you'll have to compare funds yourself.
"There is a really important gap in consumer advice at the moment," Mr O'Halloran says.
If you don't have a MySuper account, Mr O'Halloran suggests starting by working out which investment option is best for you and then trying to compare performance, fees and insurance.
Most funds let you choose from a range of investment options, typically from conservative (low risk and usually lower returns) to growth (higher risk and usually higher returns).
You can then compare like for like using a few tools.
The financial regulator publishes a "heatmap" that allows you to compare your fund over a range of metrics (but it's not easy to use).
You can also compare funds by looking at a league table (these are produced by private companies).
But Mr O'Halloran warns some can be limited and you may have to pay to access detailed information.
"They don't always compare the entire market. A lot of the data collection agencies are in a commercial relationship with super funds and that's how they get the data," he says.
"So some super funds may not appear if it's been a bad performer."
Look for above-average performance
"You want your fund to be performing above the average," says Alex Dunnin from Rainmaker, a financial services data and research firm, says.
"If you're in a good super fund, one of the marks is its long run return. Is it above average over three to five years? That's how you judge them."
Fees are important too.
The average super fund charges about 1 per cent in fees Mr Dunnin says.
"By paying more fees you don't necessarily get better returns. So why should you pay more fees if you don't have to?"
And finally, do some research about what insurance you need (you can use ASIC's Moneysmart calculator) and what is offered by the various funds.
"Ask them questions about what scenarios they protect as some work differently," Mr O'Halloran says.
I'm in an underperforming fund. What now?
The four MySuper funds that failed twice are now closed to new members.
Three of them have announced mergers with performing funds.
- BT Super's Retirement Wrap (which will merge with Mercer Super)
- Energy Industries Superannuation Scheme - Pool A (which will merge with Cbus super)
- Australian Catholic Superannuation and Retirement Fund LifetimeOne (which will merge with UniSuper)
All three companies say if members do nothing, they will be automatically transferred to the new fund's default MySuper product.
Members of AMG Super will remain in that fund, unless they switch themselves.
Here's how to switch
Once you've done your research, if you decide to switch, head to my.gov.au and follow the links.
You can also contact the new fund directly and they will organise to transfer the funds on your behalf.
Just remember, super is a complex topic and if you need individual advice and support, contact a professional.
This article contains only general information.
