At a hearing of the committee on Friday, deputy chair and Labor MP Andrew Leigh pointed out that BT’s funds were “a sea of red” on the prudential regulator’s heatmap assessing MySuper product performance, meaning they were delivering below-average outcomes to members.
BT managing director of superannuation Melinda Howes said the group acknowledged “we’ve had a period of underperformance in the past”, but had been correcting these issues by finding efficiency gains to reduce fees and overhauling the investment strategy of BT’s super products.
“We have simplified the business by reducing the number of accumulation funds from 14 to two, and we’ve reduced the number of super entities from six to two,” Ms Howes said in her opening statement to the committee.
“This simplification has already allowed us to update fees for members and improve competitiveness which will be reflected in APRA’s updated heatmap. We expect the total fees to be white in the next heatmap.”
BT chief investment officer Corrin Collocott suggested that the heatmap was not providing a full picture of total returns, and that the wealth group’s MySuper products were performing well using other methodologies.
“The APRA heatmap and measures inside there are testing the investment activities of the fund that relate to a relatively small portion of total returns,” Mr Collocott said.
“If you are expecting a return in a typical range of 6 per cent, they are testing the value add of 1 per cent out of that 6 per cent, so it’s not necessarily the case that the red on the heatmap means we are not putting the right amount of dollars in member accounts. If you look at the funds and total returns we are dealing with, you’ll see a different picture.”
Ms Howes added that there were “a range of ways of measuring performance if you measure the eventual outcome to members”.
“There’s a range of different ways you can measure returns and I think a lot of different methodologies. The way APRA measures funds is on a broader range of measures,” she said.
