Key Takeaways

  • A super fund that consistently underperforms its peers by even a small margin can cost members tens of thousands of dollars over a working life.
  • APRA's annual performance test under the "Your Future, Your Super" framework identifies lagging MySuper and certain choice products and requires them to notify members.
  • Fee differences, even half a percentage point, compound dramatically over decades and deserve as much scrutiny as investment returns.
  • Switching funds is not always the right move — understanding your insurance, investment option, and total cost is essential before making a change.
  • The tools to assess your fund are freely available and comparison takes less time than most people assume.

The Silent Drain on Your Retirement Savings

Of all the forces working against Australian superannuation members, underperformance is among the least visible and among the most damaging. Unlike a market crash — sudden, news-worthy, and universally shared — underperformance accumulates gradually and quietly. It simply means your balance is smaller than it should be, year after year, compounding into a retirement outcome that is materially worse than it needed to be.

With the Superannuation Guarantee now at 12% of ordinary time earnings, the quality of what your fund does with that money matters enormously. For a person with a 30-year accumulation horizon, the difference between a high-performing and an underperforming fund can be the difference between a comfortable retirement and a financially constrained one. In 2026, with APRA's performance testing regime well established and comparison tools readily accessible, there is no good reason to remain in an underperforming fund without at least understanding the situation.

How Underperformance Compounds

A gap of 1% versus 0.5% in annual fees, sustained over a working lifetime, results in a meaningfully smaller retirement balance. Add the compounding effect of lower investment returns year after year, and the cumulative cost of staying in the wrong fund becomes very large. A fund returning 7% per year over 30 years produces a dramatically different outcome from one returning 6% — even if both seem reasonable in isolation. APRA's performance data shows persistent and material differences in long-run returns between the best and worst performing funds in Australia.

What the Performance Test Actually Measures

APRA's annual performance test assesses MySuper products and certain choice products against a benchmark based on each product's strategic asset allocation. Funds that underperform their benchmark by more than a set margin over a rolling eight-year period fail the test. Funds that fail are required by law to notify their members within 28 days, informing them of the underperformance and their right to switch. If a MySuper product fails two years in a row, it is prohibited from accepting new members until it passes.

What the Test Does Not Measure

The performance test measures returns net of fees against a benchmark, but does not fully capture administration fees, insurance premiums, or investment options beyond the default. The eight-year rolling window means a recently reformed fund may still carry the weight of historical underperformance. The test is a useful starting point, not a complete picture.

Understanding Fees: The Other Half of the Equation

Investment returns attract most of the attention when people evaluate super funds, but fees deserve equal scrutiny. Super fees come in several forms: administration fees (flat dollar or percentage-based), investment fees and costs, advice fees, and insurance premiums for death, total and permanent disability, or income protection cover.

For a member with a balance of $100,000, a fund charging 1.5% in total fees costs $1,500 per year. A fund charging 0.7% costs $700. That $800 annual difference, invested in super over 20 years at a reasonable return, becomes a very large number. Industry super funds — structured as not-for-profit entities run for the benefit of members — have historically tended to offer lower fees than many retail funds, though there is significant variation within both categories.

How to Check Your Fund's Performance

The ATO's YourSuper comparison tool allows members to see how their fund's MySuper option compares to others on fees and returns. APRA also publishes detailed fund-level and product-level performance data on its website, updated annually. Log in to your myGov account, link the ATO, and you can see all your accounts and access the tool. Focus on five-to-ten-year net returns — after fees and taxes — rather than single-year results.

When Should You Consider Switching?

Clear signals that a switch is worth investigating include: your fund has failed the APRA performance test; your total fees are materially higher than comparable funds; your fund's long-run returns are consistently below the median for its asset allocation; or you are in a default investment option that no longer suits your age or risk tolerance.

Before switching, check your insurance carefully. Death and total permanent disability insurance held through your current fund generally does not transfer, and you could face exclusions or waiting periods with new cover — particularly relevant if you have a pre-existing medical condition. Also check for exit fees or redemption costs on fixed-term investment options.

Avoiding the Trap of Inertia

The superannuation system depends on member engagement to function as intended. A member who never reviews their fund, checks their fees, or considers whether their investment option is still appropriate will likely end up with a worse retirement outcome than necessary. But no regulatory framework substitutes for the habit of periodically reviewing your super and deciding whether it remains the right fit.