Industry Super said The Your Future, Your Super sanction of closing funds to new members will have no impact on these funds and not stop their existing members from being fleeced. The association said that even more concerning was that their members will be stapled to these dud products, which can cost each of them up to $230,000 at retirement.

The Heatmaps found 80 Choice options were ‘significantly poor performers’, 49 of these products are still accepting new members.

“As half the system is yet to be examined there are likely far more dud products lurking in the Choice sector,” Industry Super states.

“About a third of the products assessed by Heatmaps were a dark crimson for their ‘significantly’ high administration fees, and the median Choice administration fee is far higher than the median MySuper administration fees.

“Yet the government recently decided to continue a carve-out of historical administration fees from the Your Future, Your Super performance test – which hides the product’s true performance and opens the test to manipulation.”

Earlier this month the government announced it would ‘fine tune’ the Your Future, Your Super’s performance test by extending the assessment from eight to 10 years and tweaking underlying benchmarks.

However, there have been no moves to extend the coverage to all APRA-regulated products, including retirement products.

“The government should commit to all APRA-regulated funds being tested, including those in the retirement phase from this year,” said Industry Super Australia deputy CEO Matt Linden.

“All members deserve to know if their fund is a dud including retirees. These Heatmaps show once again that more needs to be done to connect members to high-quality super funds, closing products to new members is no punishment to many of these dud funds and in some cases is their business model.

 “It is disappointing for members whose funds won’t face a performance test that they will continue to be kept in the dark and if these findings are anything to go by millions are most likely stuck in a dud Choice product.

 “In a compulsory system, disengaged members should not be left languishing in a dud super fund. The government needs to upgrade consumer protections, so members are only stapled to the best funds, who have passed the performance tests.”

The Choice Heatmap covers 163 products representing $292 billion worth of members’ benefits at the end of June 2022 and nearly half of funds under management in the Choice accumulation sector.

The heatmap compares products across key metrics including investment returns, fees and costs, and product sustainability.

 The heatmap shows an improvement on the 2021 Choice Heatmap: 

• One in five Choice investment options with an eight-year history has significantly underperformed the heatmap benchmarks. Of the 407 investment options with an eight-year history, 182 underperformed the benchmarks. This includes 80 options that underperformed the benchmarks by more than 0.5 per cent. By comparison, in the 2021 Choice Heatmap, one in four Choice investment options significantly underperformed the benchmarks. 

The heatmap also shows that Choice products closed to new members are more likely to underperform and have higher fees that those that are open: 

• Two-thirds of Choice investment options that are closed to new members had poor or significantly poor performance relative to the heatmap benchmarks. The heatmap showed 22 investment options (28 per cent) underperformed the benchmarks by up to 0.5 per cent, while a further 31 (39 per cent) significantly underperformed by 0.5 per cent or more.
   
• Average fees are higher in Choice products that are closed to new members. The average annual administration fee for members with an account balance of $50,000 in closed Choice products was $225, compared with $149 for open Choice products and $137 for MySuper products. 

“While the data shows some improvement in the performance of Choice accumulation products, the fact remains that there are still far too many products delivering sub-standard investment returns to fund members,” said APRA Deputy Chair Margaret Cole. 

“As a result, APRA’s supervision of poorly performing Choice products will intensify, and trustees can expect even greater scrutiny of their product offering. Trustees with products that are underperforming or have unjustifiably high fees – or both – will need to explain why they haven't already moved their members to products with better performance and better fee structures.”