Retirees, beware: Your superannuation choices could cost you a staggering $205,000, according to a shocking warning from Super Consumers Australia. But here's where it gets controversial—while the federal government’s performance test protects those nearing retirement, it completely abandons retirees once they start drawing their savings. This glaring loophole leaves millions vulnerable to underperforming funds and sky-high fees, with no safety net in sight.
With the number of retirees relying on superannuation set to double in the next decade, the stakes couldn’t be higher. Super Consumers Australia analyzed data from the Australian Prudential Regulation Authority (APRA) and uncovered a disturbing trend: retirees invested in poor-performing products are losing up to $205,000 over their retirement years. And this is the part most people miss—the same funds that failed the government’s performance test for pre-retirees are being offered to retirees, unchecked and unregulated.
Xavier O’Halloran, CEO of Super Consumers Australia, highlights the absurdity: “A 64-year-old is protected by a performance test, but the moment they retire and move into an identical product, that safeguard disappears.” He argues that retirees are left in the dark, with little scrutiny on the returns, fees, or overall performance of their investments. “They’re getting away with delivering poor performance and high fees on products that are crucial to people’s retirement income,” he warns.
O’Halloran calls for urgent action, urging the federal government to extend the performance test and ATO comparison tool to retirement products. Without these measures, he says, retirees will continue to be trapped in underperforming funds due to a lack of transparency and quality testing. But not everyone agrees. Here’s where opinions collide—Blake Briggs, CEO of the Financial Services Council, argues that retirement products are fundamentally different from accumulation products, making a performance test expansion inappropriate. “Retirement products aren’t just about investment returns,” Briggs explains. “They’re designed to provide flexible cash access, sustainable income streams, and manage longevity risk. There’s no one-size-fits-all solution.”
The debate heats up when major super funds like AMP, Russell Investments, Colonial First State, and REST are singled out in the report for consistently underperforming across multiple growth categories. Super Consumers Australia found that 91% of accumulation options that failed the performance test since 2023 were also offered to retirees. For instance, a retiree starting with $250,000 in the worst-performing options could lose between $57,000 and $205,000 in investment returns compared to their peers.
However, these funds are fighting back. Colonial First State dismissed the analysis as selective, focusing on just 12 out of 200 investment options. REST pointed to independent awards and ratings as proof of their strong performance, while AMP called the report “narrow and irresponsible,” citing strong relative returns for retirees in recent years. But here’s the burning question—if these funds are confident in their performance, why resist greater transparency and scrutiny for retirees?
Public opinion is clear: 74% of Australians support extending the performance test to retirement products, and 84% demand more transparency. As the retirement landscape evolves, the need for fair and accountable systems has never been more urgent. What do you think? Should retirees be left to navigate this financial minefield alone, or is it time for the government to step in and level the playing field? Let us know in the comments—this is a conversation we can’t afford to ignore.
