The five worst-performing pension funds in the country have been unveiled and millions of Australians have been urged to move their money elsewhere.
The Australian Prudential Regulation Authority (APRA) tested 69 funds against the industry benchmark and five underperformed, with four failing the test a second time.
The last five were Westpac Group’s Retirement Wrap, BT Super’s Retirement Wrap, Energy Industries Superannuation Scheme Balanced MySuper, Lifetime One’s Australian Catholic Superannuation and Retirement Fund and AMG Super.
The country’s five worst performing pension funds have been unveiled and millions of Australians have been urged to shift their money elsewhere (pictured young women in Melbourne).
The Australian Prudential Regulation Authority (APRA) tested 69 funds against the industry benchmark and five underperformed, with four failing the test a second time (stock image)
The five worst retirement funds
1. Anti-aging film from Westpac Group
2. BT Super’s Retirement Wrap (also owned by Westpac)
3. Energy Industries Balanced MySuper Retirement Plan
4. Lifetime One’s Australian Catholic Superannuation and Retirement Fund
5. AMG Super
The regulator looked at each fund’s costs, fees and performance over the past five years and compared the results to MySuper — the default option for those who don’t choose a specific retirement fund, such as Rest, Hostplus or AwareSuper.
According to APRA, four of the superfunds have failed the test a second time and are no longer allowed to accept new clients.
“The four products that failed the test a second time are now closed to new members,” the regulator said in a statement.
“Of those four products, three were offered by trustees planning to exit the industry.”
These three funds have until September 28 to tell their clients to move their investments elsewhere.
Westpac Group’s retirement wrap failed for the first time, while the remaining four failed for the second time – some had failed twice in two years.
The 500,000 Australians whose retirement savings are currently invested in one of the three funds are being advised to reallocate their money and can be helped to transfer their money to MySuper.
MySuper products are standardly offered by super funds and this is where the majority of the population invest their retirement savings.
APRA said four of the five funds have failed the test for the second time and are no longer accepting new clients (pictured, a woman shops in Sydney).
MySuper products are the standard products offered by super funds and into which the majority of the population invests their retirement savings (Sydney city workers pictured).
Average Aussies Super by tax bracket
AVERAGE SUPERANNUATION BALANCE: $145,388
$18,200 OR LESS: $143,479
$18,201 TO $37,000: $92,490
$37,001 TO $90,000: $116,698
$90,001 TO $180,000: $249,830
$180,000 OR MORE: $575,470
NO TAX REFUNDS: $99,468
Australian Revenue Commissioner figures for 2019-20
Association of Superannuation Funds of Australia (ASFA) CEO Martin Fahey said three-quarters of the population were with a fund chosen by APRA – which had improved overall in the latest performance test.
Mr Fahey told 7News that regular performance tests weeded out the funds that were underperforming and ultimately saw Aussies earning better returns on their Super.
He said Westpac-owned BT Superfund had failed for a second time and skewed results due to its large client base.
“What we have is one particularly large fund, BT, which has a very large number of accounts,” he said.
“When you extract that, the numbers are even more amazing than what they are.”
There were 13 million member accounts that passed the Super Achievement Test.
It comes just weeks after new data from the Inland Revenue showed the average Australian doesn’t have nearly enough money to retire – with a typical balance sheet of just $145,388.
This is significantly less than the $535,000 recommended by the Association of Superannuation Funds of Australia (AFSA) for those retiring at 67.
Only some of the wealthiest Australians, earning more than $180,000 a year, had more than the recommended pension plan, while workers on middle and average wages were significantly scarce.
It comes amid a national debate over how much money Australians need to retire.
New figures from the Australian Revenue Commissioner show that the typical worker had an average balance of $145,388 in fiscal year 2019/20. Men had an average balance of $161,834 compared to $129,506 for women.
Association of Superannuation Funds of Australia (ASFA) CEO Martin Fahey said three-quarters of Australians are with an APRA-selected fund – which has seen an overall improvement in the latest performance test (pictured, guests in Sydney).
Only Australians earning more than $180,000 a year to be in the top tax bracket had more than enough recommended retirement savings, while workers in the middle and average bracket were in short supply (stock image shown).
Both levels are well below the $164,000 that ASFA recommends that someone must have saved by age 40 to reach their comfortable retirement goal of $535,000 for homeowners who receive retirement at age 67.
Meanwhile, workers in the top tax bracket of more than $180,000 had average superfunds of $575,470 — making them the only group to beat ASFA’s pension recommendation.
Average and slightly below-average income earners in the $37,000-$90,000 tax bracket had average super balances of $116,698.
This covered the median taxable salary of $63,882, including $74,559 for men and $52,798 for women, with figures including both full-time and part-time employees.
Those in the $90,000 to $180,000 range — including the average full-time employee at $90,917 — had an average retirement savings of $249,830.
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