APRA Performance Test 2026: How to Audit an Underperforming Fund

The Australian Prudential Regulation Authority (APRA) released the findings of its 2026 Annual Superannuation Performance Test, evaluating 547 superannuation products representing 61 per cent of APRA-regulated member benefits [1]. Designed under the Your Future, Your Super framework to eliminate chronic underperformance and curtail uncompetitive fees, the annual assessment flagged 12 products that failed to meet legislated benchmark standards [1]. For Australian residents, expatriates maintaining domestic balances, and self-directed investors, these results provide a concrete benchmark to audit existing superannuation holdings, calculate fee drag, and evaluate replacement funds before executing an account rollover.

The 2026 APRA Test Results: MySuper and Choice Platform Findings

Of the 547 products examined across the industry, 12 failed the performance criteria, while all 356 non-platform trustee-directed products (TDPs) successfully met or exceeded their benchmarks [1]. Crucially, the 2026 assessment marked the first time since 2023 that a default MySuper product failed the test: the BUSS (Queensland) Pty Ltd MySuper product failed to meet its net investment return and fee benchmarks [2]. Across the remaining 49 MySuper offerings, investment performance satisfied APRA standards [2].

The remaining 11 failures occurred within the platform choice sector, where 141 platform trustee-directed products were evaluated [1]. Among these, five products were repeat failures, having fallen short of benchmark metrics for at least two consecutive years [3]. Under the Superannuation Industry (Supervision) Act 1993, any product failing the annual test for two consecutive years is prohibited from accepting new members until underperformance is fully resolved [2].

The Compounding Drag of Uncompetitive Returns and High Fees

Superannuation represents a multi-decade accumulation horizon, making net investment performance and fee structures decisive variables in determining final retirement wealth. When an investment option underperforms its strategic asset allocation index by even 1 per cent per annum over a working life, modeling by the Australian Securities and Investments Commission (ASIC) Moneysmart demonstrates that a member can lose more than 20 per cent of their total nest egg at retirement [4]. On average retirement savings, this disparity routinely equates to a six-figure sum.

APRA confirmed that failure in the 2026 test was predominantly driven by inadequate gross investment execution rather than solely excessive administration costs [1]. However, platform wrap fees and multi-layered management expense ratios exacerbate negative differentials, creating a sustained compounding friction that permanently impairs capital growth.

Why Platform and Choice Investors Must Conduct Manual Audits

While trustees of failed MySuper and choice products are legally required to send written underperformance notices to members within 28 days of the test release, passive monitoring is insufficient for investors utilizing wrap accounts and choice menus. The APRA test assesses trustee-directed products, but single-sector choices (such as standalone Australian share options or specialized thematic sleeves) remain outside the scope of formal test pass/fail designations.

Investors using master trusts, investor-directed portfolio services (IDPS), or wrap accounts frequently select specific underlying model portfolios that carry substantial platform administration fees on top of investment manager charges. Inactive members who assume their option is compliant simply because their fund as a whole did not fail must independently examine whether their specific platform option matches relevant industry asset class benchmarks over rolling 5-year, 7-year, and 10-year periods.

A Structured Framework: Benchmarking and Insurance Due Diligence

Auditing and transitioning away from an underperforming superannuation product requires a systematic process to protect retirement assets without triggering unintended gaps in personal financial protection:

• 1. Access the ATO YourSuper Comparison Tool: Members holding default options can log in to ATO online services via myGov to access the YourSuper comparison tool [5]. The portal links directly to live super balances, ranking registered MySuper options by net investment returns over rolling horizons and displaying exact annual administrative fees based on member balance tiers [5].
• 2. Audit Choice Holdings Against Sector Medians: For platform products and non-MySuper options not featured in the basic YourSuper portal, investors must consult the APRA Comprehensive Product Performance Package (CPPP) datasets or Product Disclosure Statements (PDS) to benchmark net performance against comparable multi-asset peers [1].
• 3. Audit Group Insurance Cover Prior to Exit: Default group life insurance, Total and Permanent Disability (TPD), and income protection policies terminate automatically once an account is rolled over or closed [4]. Members with pre-existing medical conditions, hazardous occupations, or older entry ages must confirm underwriting acceptance with the target fund before closing an existing account [4].
• 4. Initiate the Rollover Online: Once a replacement fund is established and insurance is secured, transfers can be initiated electronically through ATO online services via myGov, which usually completes fund-to-fund transfers within three business days [6].

Regularly assessing superannuation health against objective regulatory benchmarks ensures that retirement capital compounds efficiently, insulated from substandard asset management and unnecessary administrative erosion.

Sources

• [1] Australian Prudential Regulation Authority (APRA) – APRA releases 2026 superannuation performance test and product insights
• [2] Australian Prudential Regulation Authority (APRA) – The 2026 annual superannuation performance test - MySuper products
• [3] Australian Prudential Regulation Authority (APRA) – The 2026 annual superannuation performance test - trustee directed products
• [4] ASIC Moneysmart – Switching super funds
• [5] Australian Taxation Office (ATO) – YourSuper comparison tool
• [6] Australian Taxation Office (ATO) – Transferring or consolidating your super

This article contains general educational information only and does not constitute personal financial, legal, or tax advice. Please consult a licensed professional before making any financial decisions.