Each year, the Australian Prudential Regulation Authority (APRA) tests the long-term performance of many super products against a benchmark. Products that fall too far short fail the test, and their members receive a letter telling them so. For most people, that letter is the first time they have thought seriously about how their super is invested.
A fail is an important signal, but it is not, on its own, an instruction to switch funds. What it means depends on which product failed, why it failed, what else your account provides, and what you would switch to. Moving too quickly can cost you valuable insurance or create new problems. Ignoring the letter can mean years of lower returns.
This guide explains how the performance test works, what happens when a product fails, what the 2026 results showed, and how to decide what to do if you receive a failure letter.
What happens when a product passes or fails
| Result | What happens | What it means for members |
|---|---|---|
| Pass | No action required by the trustee | The product met the minimum standard. It does not mean it is a top performer |
| Fail once | The trustee must write to affected members and is expected to identify and fix the causes of underperformance | You receive a letter and should review whether the product still suits you |
| Fail two years in a row | The product must close to new members, and members are notified again | Existing members can stay, but the product is under serious pressure to improve or merge |
| Pass after failing | APRA may allow a closed product to reopen to new members | Performance has recovered to at least the minimum standard |
How the performance test works
The performance test was introduced as part of the Your Future, Your Super reforms and has been run by APRA each year since 2021. It applies to MySuper products, which are the default options most Australians are invested in, and to trustee-directed products, which are diversified investment options where the trustee controls the asset allocation.
Broadly, the test compares each product’s actual returns over roughly the past decade, after investment fees and taxes, with a benchmark portfolio built to match the product’s asset allocation. Administration fees are also taken into account. A product fails if it underperforms its benchmark by more than 0.5% a year over the test period.
Because the benchmark is tailored to each product’s asset mix, the test measures how well the trustee implemented its strategy and how much members paid for it, rather than simply rewarding the products with the most growth assets.
What the 2026 results showed
APRA released the 2026 results in late August. It assessed 547 products, representing 61% of APRA-regulated super member benefits. Twelve products failed:
- 1 of 50 MySuper products,
- 11 of 141 platform trustee-directed products, including five that had failed for at least two consecutive years, and
- none of the 356 non-platform trustee-directed products.
The number of fails rose from seven in 2025. APRA said the 2026 failures were driven mainly by weaker investment performance rather than higher fees. The results are reflected in the ATO’s YourSuper comparison tool, which shows how MySuper products compare on fees and returns.
APRA also published a broader analysis alongside the results, identifying a number of products that either passed the test or were not eligible to be tested, but still showed poor investment performance or high fees over the long term.
What the test doesn’t cover
The performance test is a minimum standard for certain products, not a comprehensive rating of every super account. It generally does not cover:
- Retirement phase products, such as account-based pensions. The test currently applies to accumulation products.
- Many choice investment options, such as single-sector options like Australian shares only, or options that do not fit the trustee-directed product definition.
- Self-managed super funds, which are not APRA-regulated.
- Defined benefit schemes, where your benefit is based on a formula rather than investment returns.
A product that passed, or was not tested, is not necessarily a good product. It simply did not fail this particular measure.
If you receive a failure letter
Trustees must write to members of a failed product within 28 days of the result. The letter will state that the product has failed and direct you to the YourSuper comparison tool. It is designed to prompt you to review your super, not to tell you what to do.
Work through these steps before making a decision.
1. Identify exactly what failed
A fail applies to a specific product or investment option, not necessarily the whole fund. If your money is in a different option within the same fund, you may not be affected. If you are in a failed option, switching to another option within the same fund may be one alternative.
2. Understand why it failed
Was the failure caused by high fees, poor investment decisions, or a strategy that has not suited recent markets? A product that failed narrowly because of one asset class over a particular period is different from one that has underperformed for many years and charges high fees. Check what the trustee says it is doing to fix the problem.
3. Check your insurance first
Before switching, review any life, TPD and income protection cover you hold through the fund. If you roll your super to another fund, your insurance in the old fund will usually end. Cover in a new fund may be on different terms, may need new health questions, or may exclude conditions you have developed since joining. For some people, the insurance is worth more than the difference in returns.
4. Compare the alternatives properly
Compare long-term net returns, fees, investment options, insurance and retirement services. A fund’s performance over one or two years is a poor guide. Our guide to choosing the right super fund explains what to compare, and our guide comparing SMSFs and retail funds covers those options.
5. Consider the costs of moving
Exit fees on super have been banned, but switching can still involve buy-sell spreads, time out of the market while money is transferred, and loss of features such as insurance or legacy pension arrangements. For platform and wrap accounts, moving assets may involve selling investments, so the tax and transaction costs need to be considered.
Consolidating after a fail
A failure letter is often a good prompt to look at how many super accounts you have. Multiple accounts usually mean multiple sets of fees, and sometimes duplicate insurance. Consolidating into a single strong fund can make a meaningful difference over time, but it needs to be done carefully. Our guides on when consolidating helps and when it hurts and how to consolidate your super explain the process.
Your employer and stapled funds
Since November 2021, your super fund generally follows you from job to job. This is known as stapling. When you start a new job, your employer pays into your existing fund unless you choose another one. That means a failed fund can follow you through your career if you do not actively review it.
You can choose a different fund at any time by giving your employer a standard choice form with your new fund’s details. If you have a defined benefit or specific workplace arrangement, check whether you can change funds before doing so. While you are reviewing your fund, it is also worth confirming your employer contributions are arriving on time. Our guides to payday super and checking for unpaid super explain how.
Don’t forget your nominations
If you move to a new fund, your death benefit nomination does not transfer with your money. You will need to make a new nomination in the new fund. Our guide to death benefit nominations explains the options.
When staying put is reasonable
Staying in a failed product is not always the wrong choice. It may be reasonable if:
- the fail was narrow and the trustee has a credible plan to improve,
- you hold insurance through the fund that you could not easily replace,
- you are in a defined benefit scheme or have valuable legacy features, or
- the fund is merging with a stronger fund, which often happens after consecutive fails.
Equally, it is rarely wise to stay simply because changing funds feels like effort. Small differences in net returns compound into large differences in your retirement balance over decades.
The bigger picture
Fund performance is only one of the factors that determine how much super you will retire with. Contribution levels, investment option choice, fees, insurance costs and how long you stay invested all matter. Our guide to salary sacrifice versus personal deductible contributions covers one of the simplest ways to lift your balance. Our guide on how super fits into your overall financial plan puts the performance test in context, and our guide on whether you have enough super to retire comfortably can help you check whether you are on track.
Leaving super on autopilot is one of the most common super mistakes. A failure letter, uncomfortable as it is, can be a useful reminder to take a closer look.
Where professional advice adds value
Deciding whether to stay in a failed product, switch options or change funds involves more than comparing returns. Insurance, fees, investment strategy, consolidation, tax, retirement plans and estate planning all play a part, and the right answer differs from person to person.
A super adviser can review your fund, explain why it failed and whether that matters for you, compare alternatives on a like-for-like basis, protect your insurance during any move, and make sure your new fund and nominations are set up correctly. For people with larger balances or platform accounts, advice can also help manage the tax and transaction costs of switching.
If you have received a failure letter, or simply want to know whether your super is working as hard as it should, our superannuation advisers in Adelaide can help.
Frequently asked questions
What is the super performance test?
It is an annual test run by APRA that compares the long-term net returns of MySuper and trustee-directed products against a benchmark matched to each product’s asset allocation, with administration fees taken into account. Products that underperform by more than 0.5% a year fail.
What happens if my super fund fails the performance test?
The trustee must write to affected members within 28 days and is expected to address the underperformance. If the product fails two years in a row, it must close to new members. Existing members can stay, but should review whether the product still suits them.
Should I switch funds if my super fails the performance test?
Not automatically. First check exactly which product failed and why, review any insurance you hold through the fund, and compare alternatives on long-term returns, fees and features. Switching can be the right decision, but it should be made carefully.
How do I find out if my super fund failed?
If your product failed, your fund must write to you. APRA publishes the full results each year, usually in late August, and the ATO’s YourSuper comparison tool shows MySuper products that have failed.
Does the performance test apply to my pension account or SMSF?
Generally not. The test currently applies to accumulation-phase MySuper and trustee-directed products. Retirement products such as account-based pensions, SMSFs, defined benefit schemes and many single-sector choice options are not covered.
Will I lose my insurance if I switch super funds?
Usually, yes. Insurance held through your old fund generally ends when you roll your super out and close the account. Arrange replacement cover before switching, as new cover may involve health questions or different terms.
Does passing the performance test mean my fund is good?
No. Passing means the product met a minimum standard over the test period. APRA has identified products that passed or were not tested but still showed poor long-term performance or high fees, so it is worth comparing your fund more broadly.
General advice warning. This article contains general information only and does not take into account your objectives, financial situation or needs. It is not a recommendation to acquire, hold or switch any superannuation product, and no specific fund or product is referred to. Performance test rules may change, and past performance is not a reliable indicator of future performance. You should read the relevant product disclosure statement and target market determination, consider whether the information is appropriate for you, and seek personal advice before acting on any of it. Money Path Pty Ltd is a Corporate Authorised Representative (No. 001306822) of Australia National Investment Group, AFSL 522028.
