Almost 1.1 million Australians will soon receive letters from financial regulator APRA telling them their super fund has underperformed.

So if one comes through your letterbox, it’s time to have a good look at your super.

The letters are part of the federal government’s Your Future Your Super reforms, which aim to improve fund performance.

An underperformer is a fund that delivers financial returns 0.5 per cent below an average benchmark for five years.

But if you receive a letter, it’s not necessarily the end of the world as many funds are restructuring to deliver higher returns.

Some retail funds in particular were held back by high fees in past years but have since reduced these and improved their performance as a result.

Maybe it’s OK now

Paramount Financial Solutions principal Wayne Leggett said funds that failed APRA’s latest test might have resolved their issues.

“You might be about to see some improvement in a market that has seen strong superannuation performances,” he said.

But you can’t take that on trust.

One option is to look on the ATO’s YourSuper comparison tool to check your fund against other options.

You could also consider switching to one of APRA’s top 10 performing funds as listed below.

Generally speaking, “people should pay more attention to their super fund and make sure it is fit for purpose,” Mr Leggett said.

That means it needs to be tailored to your circumstances.

If you don’t feel capable of working out on your own which fund to choose, then “maybe you should consider getting some advice,” Mr Leggett said.

That could be provided by your super fund or by an independent adviser, who can give you a wider overview of your options.

Alex Dunnin, director of research group Rainmaker, said some funds named as duds by APRA have already made significant improvements.

“If you look at what BT is doing, or CBA Essential, they were top performing super funds last year,” he said.

Super funds have also not been given details on how they have underperformed or by how much.

“If a fund were to ask, ‘Well, where’s my weakness?’ APRA is not telling them that because the law doesn’t require them to,” Mr Dunnin said.

Westpac closes dud fund

APRA has told funds they cannot act precipitously by moving their members into another one of their products from a product the regulator has classified as underperforming.

However, Westpac’s Asgard appears to have got in ahead of time and advised members of its Employee Super product that the fund will be closed, according to reports.

Their memberships will be rolled into an equivalent fund in Westpac’s BT group.

But that won’t get members out of trouble, as BT’s product set to welcome Asgard’s members was also listed as an underperformer.

Westpac apparently contacted members in the fortnight before APRA released its underperformance tables, which left it free to close the Asgard fund.

Westpac failed to respond to The New Daily‘s questions.

An APRA spokesperson said they were “aware” of Westpac’s action.

Get your facts straight

Whatever your super fund, it’s worth thinking carefully before switching.

Rob Goudie, a principal at Consortium Private Wealth, said members should make sure they aren’t acting on hearsay or generalities.

Just because you read that your superannuation provider has been named as an underperformer, doesn’t mean your investment option is affected.

“Many people get concerned because they hear their fund has been named, but they might be invested in a completely different fund [run by the same provider],” Mr Goudie said.

“You need to confirm that you’re comparing apples with apples and know exactly which fund you are invested in and whether it has been named.”

If you are concerned and want to change funds, it’s a good idea to do it this month.

That’s because the new legislation will see you stapled to your current super fund at that date and your fund will then follow you through your working life.

You can, of course, change your choice of super fund at any time, but it’s best to take the chance to review your fund choice now to ensure you are not stapled to an underperformer.

If your current fund is named as an underperformer for two years in a row, it will be barred from accepting new members until it improves performance.

But that won’t help you if you are stapled to a low performer, so consider your fund performance now and take action based on your assessment.

The New Daily is owned by Industry Super Holdings