CBA (ASX:CBA) just failed the government’s superannuation test

CBA might have a super problem…
The post CBA (ASX:CBA) just failed the government’s superannuation test appeared first on The Motley Fool Australia. –

If you’re the largest bank in Australia, and on the ASX, it’s probably not a good look to have one of the nation’s worst-performing superannuation funds in your wheelhouse. Yet that is the fate that seems to lie in front of Commonwealth Bank of Australia (ASX: CBA) today. 

The federal government passed the You Future Your Super reforms in parliament earlier this year. As a result, super funds offering a default ‘MySuper’ product now have to pass an annual performance test. This test assesses both fees and fund returns. Well, the first batch of test results has just come through. And they did not have good news for CBA.

According to a report in today’s The Sydney Morning Herald (SMH), the Commonwealth Bank will now have to send letters containing the following words:

Your superannuation product has performed poorly under an annual performance test that was introduced by the Australian Government to make sure Australians are getting the most out of their super…

As a result, we are required to write to you and suggest that you consider moving your money into a different superannuation product… Switching to a different super product is easy, and there are no fees involved.


CBA hits a super foul ball

Yes, according to the report, Commonwealth Bank Group Super is one of the funds that will have to send one of those letters to their customers. Some others include Westpac Banking Corp‘s (ASX: WBC) BT Super Fund. As well as Christian Super’s MyEthical and Maritime Super’s MySuper.

Although 84% of the funds assessed passed, the above funds were part of the 16% which did not.

The Australian Prudential Regulatory Authority’s (APRA) Margeret Cole told the SMH the following on these results:

Trustees of the 13 products that failed the test now face an important choice. They can urgently make the improvements needed to ensure they pass next year’s test or start planning to transfer their members to a fund that can deliver better outcomes for them.

If the fund’s fail this benchmark again next year, they will be banned from accepting new members at all.

But Martin Fahy, chief executive of the Association of Superannuation Funds Australia, doesn’t entirely agree with the process. Here’s some of what he was quoted as stating in the report:

ASFA has long supported the orderly removal of habitually underperforming products. However some of those called out by this test are in fact good products which have delivered excellent returns to their members over a long period of time…

This is a retrospective, relative performance assessment where the so-called underperforming products are compared against top-performing products.

Even so, it looks as though these new tests are here to stay. So if you’ve got a MySuper product for your retirement savings, maybe it’s time to check out how it’s performing!

The post CBA (ASX:CBA) just failed the government’s superannuation test appeared first on The Motley Fool Australia.

Should you invest $1,000 in CBA right now?

Before you consider CBA, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and CBA wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Is the CBA (ASX:CBA) share buyback a sign of limited growth potential?
Australia’s rising delta recession risk could hit these ASX 200 shares badly

ASX 200 Weekly Wrap: A mixed bag of earnings dominates ASX

How has the Westpac (ASX:WBC) share price performed against the banking sector in August?
Commonwealth (ASX:CBA) share price lifts despite Apple crying foul

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!