APRA performance heatmaps

In December last year, the Australian Prudential Regulation Authority (APRA)  responsible for regulating the super industry, released the MySuper Product Heatmap, designed to benchmark and assess the performance and outcomes of every MySuper superannuation product available.

MySuper products are the default offerings available to super fund members, and are designed to be simple, cost-effective products suitable for the majority of Australian workers. They typically have a balanced investment split of around 70 per cent in growth assets, and 30 per cent in defensive assets1

APRA introduced the Heatmap to provide greater transparency about performance, giving the industry greater visibility of the member outcomes being delivered. 

Rest supports measures that lead to improved member outcomes and greater transparency in the superannuation industry, and the Heatmap is a significant step.
How do they work

The new tool uses a graduating colour scheme to provide visual like-for-like comparisons of the investment performance and fees and costs of different MySuper products, and provide insights into the sustainability of the product’s member outcomes.

For investment performance and fees and costs, products with a white colour overlay are performing at or above APRA’s benchmarks. Products performing below these benchmarks are coloured from pale yellow to dark red, depending on the degree of underperformance.

The sustainability measures, which provide an indication of a trustee’s ability to provide quality member outcomes into the future, are coded either white or amber.

APRA intends to refresh the heat map at least once a year, refining its methodology in response to industry feedback. Additionally, an update has been scheduled for the first half of 2020 to help trustees and other stakeholders assess early improvements being made.
Rest’s view

On both costs and fees, and sustainability measures, Rest’s MySuper option, Core Strategy, was rated white, indicating it’s performing above APRA’s benchmarks. Our results on investment performance were more mixed.

It’s important to note that superannuation is a long-term investment and Rest is focused on delivering long-term performance to our members. We prioritise this over short-term growth.

Currently, APRA’s Heatmap can only provide an assessment on shorter-term three and five-year performances. These assessments will eventually become more reliable when the Heatmap is able to include longer-term returns of 10 years or more, as that would better reflect full market cycles.

For example, our Core Strategy option was ranked eighth for longer-term 15-year returns and fourth for 20-year returns in the October 2019 SuperRatings SR50 Balanced (60-76) Index.

In recent times, we’ve had a defensive bias in our Core Strategy MySuper investment portfolio due to uncertainty in both the local and global economy, and our Investment Team has focused on protecting our members’ retirement savings.

We look forward to continuing to work with APRA to provide data and insights as the Heatmap becomes more established in the industry.

‘How super works’, ASIC’s MoneySmart (2019), https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/choosing-a-super-fund/mysuper