We’ve put together some frequently asked questions (FAQs) about the performance test and YourSuper comparison tool that were released by the Australian Taxation Office on 1 July 2021. If you have a question that we haven’t answered here, please contact us.
What does the YourSuper comparison tool measure?
The YourSuper comparison tool has been designed to help people compare the current fees and recent investment performance of MySuper products. You can read more about MySuper products here.
Are performance and fees the only differences between super funds?
No. While recent performance and current fees are important factors to consider when evaluating a super fund, there are a number of other things to think about such as:
- Investment risk – Individuals will have a different appetite for investment risk (the chance of losing some of your super savings due to investment losses).
- Investment approach – While some individuals may be comfortable to invest in any business that produces a ‘good’ return, others may decide that certain investment opportunities should be avoided due to the harm that the underlying business contributes to (e.g. weapons manufacturing, tobacco, abortion services, etc).
- Insurance coverage – Each super product has a different insurance product attached, with different levels of standard coverage, costs and policy terms.
- Services offered – While some individuals may be fine with the most basic of services being provided by their superfund, others will be interested in having an internal call centre, a mobile app or some advice services to help them pick the right investment option or insurance within the super fund. Funds that offer these services may charge higher fees than funds that outsource their call centre or offer limited online functionality.
None of the above factors are included in the YourSuper comparison website. A high-performing fund may be taking more investment risk than an individual may be comfortable with or be invested in companies involved in practices that an individual does not support. Similarly, an otherwise low-cost fund may only offer costly insurance which doesn’t provide a high level of coverage, or that a fund does not offer services that an individual expects to use.
If you are thinking of switching your super based on the information contained in the YourSuper comparison tool, it’s a good idea to check how it could impact the investments you have, the service you receive and level and cost of insurance that you may get compared to your current super fund, before making a decision.
Does the YourSuper comparison tool compare all of the superannuation products in Australia?
The YourSuper comparison tool currently only contains information about MySuper products, which is of less value for members who invest in a non-MySuper product. You can view the investment returns for all of our non-MySuper investment options on our website.
How is the performance test pass or fail rating calculated?
The annual performance test has two components: average investment returns (net of investment costs and taxes) for the last seven financial years versus a benchmark, and the administration fees for the last financial year versus a benchmark.
If on adding the two numbers, the MySuper product is more than 0.5% below the overall benchmark, it will fail the test that year.
How have the benchmarks been determined?
The investment returns benchmark is constructed according to a product’s strategic asset allocation i.e. the percentage of the product invested in different asset classes like shares, property, infrastructure etc. This means that each MySuper product could be measured against a different benchmark.
For administration fees, the benchmark is median administration fees for a group of similar products, such as all MySuper products.
Why are some MySuper products labelled ‘underperforming’?
From 1 July 2021, an annual performance test will apply to all MySuper products. Any products with an average annual return more than half a per cent lower than a certain benchmark (after deducting historic investment fees and costs and current administration fees), will be listed as ‘underperforming’ on the YourSuper comparison tool. The first performance test will apply for the seven year period ending 30 June 2021. Future performance tests will apply to eight year periods.
Why is Christian Super’s MySuper product labelled ‘underperforming’?
Christian Super has historically managed its investments to deliver the investment return objectives outlined in the Product Disclosure Statement. For our MySuper product (My Ethical Super), this objective was to achieve a 3% average annual return above inflation over 10 year periods, which the fund has over-achieved.
We have a more diverse range of members invested in our MySuper product than many other funds and have therefore historically taken a more defensive investment approach, which means we worked to minimise investment losses for our members and took less risk. This approach reflects risk-return investment theory and was made by analysing the way our members respond to market volatility. As well as this more defensive approach, there was also a degree of underperformance in some areas of our investment strategy, which we have addressed.
In response to the changing way that super funds are assessed by the regulator (APRA) in recent years, we increased the amount our MySuper product invests in riskier investments. As a result, we have delivered our investment return objectives, as well as meeting the new performance test benchmark requirements for the past two years. However, our longer-term historical returns are still lower than the regulator’s benchmark, due to the more defensive approach that was taken in the past, which is why our MySuper product has failed the performance test this year.
How has Christian Super’s MySuper product performed compared to its stated investment objectives?
Our MySuper product (My Ethical Super) has consistently achieved its investment objective stated in our Product Disclosure Statement, delivering an average annual return of 7.95% each year over the last 10 years. This means that we’ve more than doubled our members’ money during the last 10 years through investment returns alone.
How does Christian Super decide how much to charge in fees?
Christian Super is a profit-to-members fund. This means we don’t pay dividends to shareholders, and any surpluses we make year to year are either redeployed to improve services provided to members, or we pass them onto our members as fee savings.
We regularly review the services we offer our members vs the fees required to deliver these services. Our aim is to keep fees as low as possible, while still providing a helpful and distinctly Christian service to our members.
How much are Christian Super’s fees?
The fees that you pay will depend on your account balance and the investment option(s) you have chosen.
Christian Super members with $50,000 invested in our MySuper product (My Ethical Super) will currently pay $610 p.a. in fees. These fees include $215 p.a. in administration fees (that cover the cost of operating Christian Super) and $395 p.a. in investment fees (that cover the cost of investing your money). Administration fees are deducted from your account balance each month, while investment fees are deducted from investment returns, which means they do not appear as a transaction in your account.
How do Christian Super’s fees compare to other super funds?
According to SuperRatings (an independent super fund ratings agency), someone with a balance of $50,000 in their super account pays an average of $604 in fees each year.
A Christian Super member with $50,000 invested in our MySuper product (My Ethical Super) would pay $610 p.a. or just $6 more than the average.
The fees that you pay will depend on your account balance and the investment option(s) you have chosen.
Why are Christian Super’s fees higher than some other super funds in the YourSuper comparison tool?
While the YourSuper comparison tool compares the differences in MySuper fees, it doesn’t take into account the additional services, features or benefits that super fund members are getting for those fees. In other words, the tool compares relative fees but not relative value for money.
Our aim is to keep fees as low as possible, while still providing a helpful and distinctly Christian service to our members. We focus on providing value for money rather than trying to be a low-cost fund that offers limited services to members. Other funds may have a different approach, which is why fees can vary.
For example, many super funds outsource their call centre to an external provider. Sometimes this results in longer wait times before calls are answered. At Christian Super, we have an internal Member Care Team with one of the lowest call wait times in the super industry – most of the phone calls we receive are answered in less than 60 seconds.
Why are Christian Super’s fees higher than AustralianSuper’s fees?
AustralianSuper is currently Australia’s largest super fund – they have 2.4 million members, meaning they spread operating costs across more people. This is one of the main reasons their MySuper fees are one of the lowest in the YourSuper comparison tool. AustralianSuper outsource their call centre to save costs, and the amount their average member pays for comparable insurance is significantly higher than the average Christian Super member.
However, AustralianSuper’s MySuper product is not ethically screened like Christian Super’s investment options. They do have a ‘Socially Aware’ investment option that their members can choose. However, a member with $50,000 invested in this option would pay $340 p.a. in investment fees vs $315p.a. in investment fees for AustralianSuper’s MySuper product.*
Note that ethical screens applied to AustralianSuper’s Socially Aware investment option may be different to the Biblical principles that guide the way Christian Super invests on behalf of its members – you can learn more about how we invest here.
If a MySuper product fails the performance test, will the super fund have to close?
If a product fails the performance test two years in a row, it, will be closed to new members until it passes the test in a future year. The super fund does not have to close as long as it can continue to promote the best interests of its members, and members already with the fund are not forced to switch to another fund if they do not wish to. Additionally, most super funds offer a variety of other investment options that their members can choose, in addition to a MySuper product, and so new members will still be able to join the fund (just not the MySuper product).
* Source: https://www.australiansuper.com/compare-us/fees-and-costs