Identifying whether your superannuation fund is underperforming — and taking appropriate action — is one of the highest-impact financial decisions most Australians can make. A fund that underperforms by 1% per year costs tens of thousands of dollars over a career.
What Counts as Underperformance?
APRA uses a specific benchmark for the annual MySuper performance test: a fund fails if its 8-year net return is more than 0.5 percentage points per year below its own benchmark (constructed using market index returns applied to the fund’s actual asset allocation).
More broadly, a fund may be considered underperforming if:
- Its 10-year return is materially below peers with a similar risk profile
- Its fees are high relative to its returns
- It has received a red rating on the APRA heatmap for multiple metrics
- It has failed the annual APRA performance test
How to Check If Your Fund Is Underperforming
Step 1: Use the ATO YourSuper tool
Go to ato.gov.au/yoursuper and find your fund’s MySuper product. Funds that have failed the annual performance test are flagged clearly.
Step 2: Check the APRA heatmap
The APRA superannuation heatmap provides a detailed breakdown of performance, fees, and sustainability. Red ratings across multiple metrics are a strong warning sign.
Step 3: Compare the 10-year return to peers
Find your fund’s 10-year net investment return (from the fund’s website or annual report) and compare it to the top 5–10 performers in the same investment option category (balanced, growth, etc.).
| If the gap is… | What it means |
|---|---|
| Under 0.5% p.a. | Minor — within normal variation |
| 0.5%–1% p.a. | Material — warrants review |
| 1%+ p.a. | Significant — strong case to consider switching |
What Happens When a Fund Fails the Performance Test
If APRA finds your fund’s MySuper product has failed the annual performance test:
- The fund must notify you in writing within 28 days
- The letter must direct you to the ATO’s YourSuper comparison tool
- A second consecutive failure closes the product to new members
You do not need to act immediately upon receiving a performance test failure letter. But it is a clear prompt to review your fund and compare alternatives.
What to Do If You’re in an Underperforming Fund
Option 1: Switch investment options within the same fund
Some funds have both a MySuper default option and choice options (indexed funds, sector funds). If only the default is underperforming, switching to a better-performing option within the fund avoids a full fund change.
Option 2: Switch to a different fund
You have the right to choose your own super fund at any time. Provide the Standard Choice of Fund form (ATO form NAT 13080) to your employer to direct future contributions to your chosen fund. Use myGov to roll over existing balances.
Important: Check insurance before switching. When you move to a new fund, your insurance in the old fund is cancelled. If you have existing health conditions, you may not be able to get equivalent cover at a new fund.
Option 3: Wait and monitor
If the underperformance is marginal and the fund has recently merged or changed investment management, waiting a year while monitoring may be reasonable. However, significant or sustained underperformance warrants prompt action.
The Cost of Staying in an Underperforming Fund
| Underperformance | Balance | Impact over 20 years |
|---|---|---|
| 0.5% p.a. | $100,000 | ~$21,000 less |
| 1% p.a. | $100,000 | ~$41,000 less |
| 1.5% p.a. | $100,000 | ~$59,000 less |
Illustrative only — past performance is not a reliable indicator of future returns.
Frequently Asked Questions
My fund underperformed one year. Is that enough to switch? No — single-year underperformance is likely due to market conditions rather than fund quality. Use 7–10 year data for a meaningful assessment.
I got a letter saying my fund failed the performance test. What do I do? Read the letter carefully, use the YourSuper comparison tool linked in the letter, and compare your fund against alternatives. Consider insurance before switching. There’s no deadline to act, but prompt action is sensible.
How long does it take to switch super funds? A rollover via myGov typically takes 3–15 business days. During this time, your money is not invested. For large balances, this short uninvested period is a modest trade-off for better long-term positioning.
For more: Best Performing Super Funds, MySuper Performance Test, Super Rollover Guide. For advice on switching funds, speak with a licensed financial adviser via MoneySmart.