On Friday 21. January 2022, the Institute of Actuaries of Australia released its submissions suggesting possible improvements to the ATO’s YourSuper Comparison Tool. The Institute said it supports the online Comparison Tool, but its key suggestions include: (i) splitting out investment and administration fees; (ii) initial ranking by net investment performance (not by fees); and (ii) the addition of a growth asset allocation (risk) measure.
ATO’s ‘YourSuper comparison tool’
The YourSuper comparison tool will help you compare MySuper products and choose a super fund that meets your needs. It was introduced on 1 July 2021 and updated to include investment performance data on 31 August 2021.
What this tool does
The YourSuper comparison tool:
- displays a table of MySuper products ranked by fees and net returns (updated quarterly)
- allows you to select and compare in more detail up to four MySuper products at a time
- links you to a super fund’s website when you select a MySuper product from the table
- can show your current super accounts alongside other MySuper products – if you access the personalised version through myGov
- provides links to help you consolidate your super accounts.
The information displayed in the comparison tool is collated and supplied by the Australian Prudential Regulation Authority (APRA).
APRA has assessed the annual performance of each MySuper product. The investment performance column provides one of the following results for each fund:
- Performing –The product has met or exceeded the performance test benchmark.
- Underperforming –The product has not met the performance test benchmark.
- Not assessed – the product had less than 5 years of performance history and has not been rated by APRA.
Comparing shortlisted funds
You can select up to four super products at a time to shortlist and compare in more detail. Once you click the Compare button you will be able to view:
- Investment performance
- Past 7 year net return
- Past 5 year net return
- Past 3 year net return
- Total annual fee
- Investment strategy
- Restricted fund
Product details will take you to the fund website for further information specific to that super product. You can ‘pin’ up to six MySuper products to the top of the results list by using the Find MySuper product search. The returned results will only be MySuper products.
Institute of Actuaries of Australia has released its submissions
MySuper Funds
The Institute supports the comparison tool, but suggests that it does not (in its current form) achieve its objective of allowing members to compare ‘MySuper’ products. They suggest:
- Splitting out investment and administration fees;
- Initial ranking be by net investment performance – not by fees [though I do not understand this point, as the ATO’s Comparison Tool allows the 78 ‘MySuper’ funds to be ranked by any of ‘Performing/Underperforming’ APRA rating; fees; 7 year net earnings performance].
- Addition of a ‘growth asset’ allocation (risk) measure.
Choice Funds
The Institute recommends extending this ‘Tool’ to the much larger range of ‘choice’ funds (like APRA is doing with its ‘underperforming’ ratings system – see related TT article). Their recommendations specific to these funds were –
- Reduce the number of products shown by adding a filter to present only the ‘relevant’ groups of products to a member considering the underlying risk levels of products (eg. – ask if they might need the money in the next 5 years).
- Disclose ‘investment risk’ which becomes more important in ‘choice funds’
[ATO website – Comparison Description; YourSuper Comparison; Actuaries Institute website – Submissions; [APRA website – ‘Choice Heatmap‘; LTN 14, 24/1/22]
[Tax Month – January 2022 – Previous 2021] 24.1.22