APRA’s big test for super funds is working, but there is one fatal flaw

There are two buckets in them. The first and the largest are modern pool -made investment options offered by hostplus, feield and unısuper directly by HEPP.

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They are widely used and hundreds of billions of dollars together. Both industry and retail super funds sit in this bucket, so you will see the names of retail funds such as amp and engagement as well as large industrial fund players.

Then there is the second bucket and this is important because this year’s test is the place where the poorest artists emerge: platform funds. These are consultant -linked menus in retail yellow and platforms such as AMP, CT Panorama, MLC Masterkey, Colonial First State First and Insignia/Ioof.

In total, these old style platforms ‘only $ 19 billion’ holds about 19 billion dollars, and some of the system is 1.1 trillion dollars in mysperders. But they are important, because most of the people in it are stuck in the products predicted years ago and are older customers whose consultants do not mark.

According to the report, these products are expensive, while doubling the wages of large funds, it usually provides worse performance. My mobilizing message: If you are in an old platform product, it’s time to examine how it is stacked and is still true for you.

Therefore, the test is no longer only related to the default funds. Now it sheds light on the market much more. However, there is a capture: your perfect tool, which you can use for comparison, still allows you to compare MySUPER assumptions. If you are in one of the wider products, the results are included in the APRA’s report, they are not yet in the easy comparison tool.

Consumer won

For people who are still working and entering super without a second thought, the test is a huge gain. It prevents the funds from performing silently low performance while pricing wages happily. And if you’re thinking of making a transition, it allows you to take care of yourself at high artists and the lowest wages.

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It also forces fees to a much more strict range. A few years ago, many funds were paid to the north of 1-1.5 percent at total costs. Today, the total cost of MYSUPER defaults on the range of 0.2-0.4 percent (in $ 50,000 balance) and $ 200,000 balances for management wages is much more competitive and even homogeneous than 0.67-0.75 percent.

In other words, most of the assumed funds are now sitting in the same basketball field. If you are in the mainstream Mysuper or the Big Fun option, you are not likely to be a hollow.

This convergence is a direct result of public pressure created by the test of Apra. The regulator not only told consumers which funds were unsuccessful, encouraged to reduce the board of trustees and improve returns, so that they do not enter the naughty list.

Pensioners: swing in the dark

Here is the part that no one is talking about. If you are retired – even on the pension track – APRA’s performance test does not apply to you. The test only measures how the funds performance while accumulating. It does not say anything about how funds perform during the retirement phase, that you will actually encounter, provide a stable income, or simplify retirement and bury the bureaucracy or bury it in bureaucracy.

This flies the retirees blind and does not pressure the funds to remove the government test games. Many of them still sit in old platform products without realizing it, and these metrics are not published anywhere. The cost of this silence can be huge: tens of thousands of dollars less to spend in retirement.

Performance test is perfect to determine who failed in the classroom. But after graduating from retirement? The teacher went home and no report card.

And this is the real problem. As you move towards retirement, it is still very important to pay attention to whether a fund provides solid returns and fair wages. But this is just part of the story. It is also about whether the fund is simple to deal with your money or whether it is a bureaucratic nightmare. It also offers useful products and services for the pension phase. And are they valuable members to retirees or are they considered later?

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And so, I remind you that I stepped into the void with the launch of the “Epic Pension Tick ılan supported by Chand West two weeks ago. On October 2, the first funds to deliver 12 out of 18 people when we selected during the retirement phase.

Tick ​​is designed to measure things that Apra does not do: yes, performance and wages also make a fund developing retirement income options, how easy it makes the retirement phase understand and navigate and the quality of support it offers after stopping. Since the retirement is different – the risks are bigger, the bets are higher and the questions are “Have you beat the criterion?” (Although this is still important.)

If Apra’s test tells how the funds performance while putting money, the tick will say how they perform and use the services they offer when you need to draw.

After all, Super’s purpose is not just a big balance. It is to finance a good life when you stop working.

Bec Wilson is the best -selling author How to make an epic retirement and newly published Prime Time: 27 Lessons for New Middle Life. He writes a weekly bulletin epicretirement.net and hosts Prime time Podcast.

• The recommendations given in this article are general in nature and do not aim to influence readers’ decisions on investment or financial products. Before making financial decisions, they should always seek their own professional advice, taking into account their personal conditions.

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