APRA’s performance test: Platforms continue to miss the mark

APRA is required to assess the performance of all MySuper products annually. In 2023, the requirement to test certain choice products was added – after initially being planned to begin in 2022.

APRA uses data about performance, fees and strategic asset allocation (SAA) provided in mandatory super fund reports as well as information about the return of indices that represent each asset class tested.

To perform the test, APRA constructs a benchmark portfolio that matches the strategic asset allocation of the product being tested. This benchmark uses the real return from the index selected to represent each asset class – for example, the Australian shares portion is represented by the S&P/ASX 300 Total Return Index.

By combining the returns of each underlying index in the proportions that occur in the option’s strategic asset allocation, APRA comes up with an expected return for that asset allocation if it earned a return matching the indices.

The return of the benchmark (after deducting an allowance for the median fees and taxes for that product category) is then compared with the real return of the product after investment fees and taxes.

Performance history over at least seven years and a maximum of ten years is included. If the product’s actual return over the testing period is lower than the benchmark return by 0.5% per year or more, it fails the test.

What the test is effectively doing is asking the question: How did the real return of the product compare with what would be expected if it was passively invested in index funds with the same strategic asset allocation?

A complicating factor is that there is no index for alternative investments, so the benchmark for alternatives is instead made up of a mix of international shares and fixed interest.

Which Choice products are tested?

The first point that needs clarification here is the word ‘product’. When you think of a super product, you probably envision a super fund and all the investment options that fund offers. For the purposes of the performance test though, a product is an investment option. A super fund with 10 investment options is offering 10 super products – according to APRA.

Next, not all choice products are included in APRA’s performance test. To be included, a choice product must be a Trustee Directed Product (TDP). A TDP is an investment option that is offered in the accumulation phase, contains at least two asset classes, and the trustee has a degree of control or influence over the investment strategy.

This definition excludes the majority of investment options offered via super platforms, where the investment management is completely independent of the trustee, conducted instead by investment management firms that are not associated.

AMP Platforms executive Edwina Maloney commented after the 2025 results were released that “the test covers just 3% of the platform market, causing distorted and misleading results, and potential consumer harm”. The point is not without merit. Members’ savings can be moved from platform products that have failed into others that are not subject to APRA scrutiny, potentially exposing them to higher fees and further underperformance, unchecked by annual performance testing.   

Products that failed

Of the 137 choice platform products tested, 7 failed to meet the test benchmarks – or around 5%. This is an improvement from the almost 1 in 5 failure rate in this product category last year and reflects the withdrawal of options that were performing poorly.

In 2024, AMP were responsible for 36 of the 37 failed options. Since then, 33 of those products have been withdrawn, with member’s savings moved into alternatives. The remaining three failed the test for the third consecutive year. Another AMP product failed the test for the first time, bringing their total list to 4 products for 2025.

IOOF’s Expand (also known as the IOOF Portfolio Service) has one failed option, a product acquired from a 2021 merger with MLC. This product failed the test for the third consecutive year, and IOOF has stated that fewer than 130 members on the platform hold it.

The remaining two failed products are from Bendigo Bank’s SmartStart Super fund and appear on the list for the first time in 2025.

APRA commented that a small further number of choice platform products would have failed the test if not for rebates the trustees chose to apply to them. The regulator will engage further with those trustees.

First time fails

Repeat failures

These products are closed to new members as required under the law.

My investment option(s) passed, am I in the clear?

Unfortunately, passing the performance test is not the end of the story for super returns and fees.

In addition to the main performance test, APRA conduct more extensive product testing as part of their Comprehensive Product Performance Package (CPPP).

The 2025 package lists more than 100 superannuation options that either passed the performance test or are not eligible to be tested and have significantly poor investment performance. The more detailed analysis in the CPPP includes comparison with similar options offered by competitors rather than the simple benchmarking against index returns that makes up the performance test.

In addition, the CPPP identified 17 products with significantly high administration fees.

Consequences of failing the test

When a product fails the test for the first time, the trustee must write to all members with money in that investment option. The wording of this letter is specified in regulation, to prevent funds from attempting to put a positive spin on the message. Essentially, the letter explains the investment option has failed the test and you should consider moving your money to another option or super fund.

The letter will also direct you to use the government’s YourSuper comparison tool to search for a suitable alternative fund – although this tool only compares MySuper options.

If a product fails for a second consecutive year it must be closed to new members and existing customers must again be sent a letter explaining the failure. Existing members can keep money in the option, but new investors can’t be added.

Super trustees with failed products are required to assess the implications of failing the test on business operations and consider whether members’ financial interests would be best served by transferring them to another product or fund. The impact of this requirement is clear, with all but four of the products that have ever failed the test more than once withdrawn from the market entirely.

What about retirees?

One blind spot in the performance test is that it doesn’t currently apply to any products solely in the retirement (pension) phase. This leads to some lack of transparency over fees and performance for pension account holders.

If your fund has failed investment options in the accumulation phase, it pays to be suspicious of the corresponding pension options, as the underlying investments for options with the same name will be similar, if not identical.

Xavier O’Halloran, director of Super Consumers Australia (SCA) says: “The bad news is there’s little transparency over retirement products’ fees and performance, and no accountability for funds that poorly manage retirement products. Without this, how can the growing number of Australian retirees be confident that their fund is operating in their best interests?” 

SCA has called on the government to expand an appropriate performance test to all APRA-regulated funds, including retirement products, as a matter of urgency.

What to do if you’re in a failed option

If you’re invested in a failed option, it’s time to reassess your super.

Since all this year’s failures are in wrap/platform products that are often only available via a financial planner, a good place to start is the adviser that recommended you invest there. They may be able to suggest an alternative or explain if staying put is in your interest. For example, the AMP options with a ‘Guardian’ label may be attached to a capital guaranteed agreement that ensures your investment’s value can’t go down from one year to the next.

If you no longer have a relationship with your adviser, you can engage a new one to guide your decision or choose from the platform’s investment menu yourself. Without an adviser, you may not be able to access the full range of options. Alternatively, you might want to consider moving to a new super fund. Many funds offer a free comparison tool on their websites, or you can follow our guide on how to compare super funds.