APRA pulls up Bendigo Super over poor performance in latest package

APRA has called out Bendigo Super in its latest comprehensive product performance package (CPPP) over significant poor investment performance despite the trustee passing the annual superannuation performance test. 

This week, the prudential regulator published the new CPPP for the first time, explaining that it looks at investment performance more broadly to factor in asset class selection and performance relative to peers. 

The CPPP, which covers 876 MySuper and choice products, identified products that have underperformed in addition to the products flagged as underperforming by the prudential regulator’s usual performance test. 

When looking at investment performance more broadly, APRA said the CPPP identified Bendigo Superannuation’s MySuper product as a poor investment performer over a 10-year period. 

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Bendigo Super’s platform TDP products were also called out for significant underperformance, including its Bendigo Balanced Wholesale Fund and Bendigo Conservative Wholesale Fund.

Bendigo Super was acquired by Betashares earlier this month, with the fund manager noting at the time that it intends to undertake a review of the fund’s investment menu.

While Bendigo Super’s MySuper product was the only one MySuper product to be flagged by APRA for poor performance, its platform TDP products were among a long list of products called out by the regulator. 

Among them are a number of options offered by NM Superannuation, IOOF and Avanteos Investments Limited, among others.

Numerous products from Australia’s largest funds also found themselves on the list of APRA’s non platform underperformers, including Australian Retirement Trust’s Diversified Bonds – Index, Rest’s Property Accumulation option, and UniSuper’s Listed Property option. 

“Product performance is a key element that trustees must consider when managing the retirement savings of their members,” said APRA deputy chair Margaret Cole.

“While performance of products across the entire superannuation industry has improved following the introduction of the performance test and APRA’s heatmaps, there are still underperforming products that need improvement particularly among choice product offerings.

“APRA has no tolerance for members to remain in poorly performing products without credible and timely rectification by a trustee.”

The latest performance test for the financial year 2024, saw a significant drop in the number of failing products, with all MySuper products and non-platform products passing the test.

However, 37 out of 192 platform products failed the annual test, with 27 of these failing for a second time.

In its latest CPPP, the regulator said the investment component of the test was the primary driver of failures, with products failing through poor investment performance alone, before fees and costs had even been considered.

Almost all failed products had high administration fees and costs, it said, with 36 out of the 37 failed products having fees and costs above their relative peer benchmarks.

APRA also observed platform products charge higher administration fees and costs than other product types, which it believes could be “particularly detrimental” to members with lower account balances.

“High administration fees and costs can erode members’ account balances over time, leaving members in a worse financial position in retirement than other members who were in products with lower administration fees and costs,” it said.

“Trustees should examine the drivers behind their significantly higher administration fees and costs and whether they are able to become more efficient so they can reduce their fees and costs.”

The prudential regulator flagged the CPPP as the first in a series of releases expected over the next year, with its super expenditure data to be published next month and insurance data expected in early 2025.