In short

The Your Future, Your Super reforms introduced an annual APRA performance test that compares a fund's eight-year net returns against a benchmark — two consecutive failures close the fund to new members, driving a wave of mergers. Fund stapling, effective from 1 November 2021, ends automatic new accounts when changing jobs, and the free YourSuper comparison tool lets members compare funds on fees and performance.

In 2021, the Australian Government introduced the Your Future, Your Super (YFYS) package of superannuation reforms. The stated aims were to improve fund performance, reduce account fragmentation, and strengthen trustee accountability. Five years on, the reforms have had visible effects: a number of underperforming funds have merged with stronger ones, new employment no longer automatically creates a second super account for most workers, and members have access to a government-provided comparison tool for their first time. For pre-retirees evaluating their fund, considering consolidation, or just trying to understand whether their current fund is any good, the YFYS framework provides genuinely useful signals — though like all regulatory frameworks, it has limitations that are worth understanding alongside its strengths.

The annual performance test

The centrepiece of the YFYS reforms is the annual superannuation performance test, conducted by the Australian Prudential Regulation Authority (APRA). Each year, APRA compares a fund's net investment returns over an eight-year period against a benchmark designed to reflect the asset classes the fund holds. The test produces a binary outcome: pass or fail. Funds that pass are not required to do anything; those that fail must notify their members of the failure within 28 days, and those members have the right to switch funds at no cost if they choose to do so. A fund that fails the test twice in a row is prohibited from accepting new members — effectively forcing it to merge with a better-performing fund or wind up.

This consequence — closure to new members — has driven a wave of fund mergers in the industry since the test was introduced. Smaller funds with chronically below-benchmark performance have consolidated with larger, better-performing funds rather than face the reputational and practical consequences of two consecutive failures. The result, from a member perspective, is a super system with fewer but generally stronger default options for those who do not actively select their own fund.

The test initially applied to MySuper products — the default, simple investment option that most members in accumulation phase are invested in if they have never made an active investment choice. The test was subsequently extended to a broader range of choice products. For most super members, the performance test result for their fund's default option is the most relevant indicator.

How to check your fund's result

APRA publishes performance test results on its website each year (apra.gov.au). Funds that fail are required to notify members, so if your fund has failed a test, you should have received correspondence about it. If you are not sure of your fund's current status, checking APRA's published data or contacting the fund directly is straightforward.

The YourSuper comparison tool, available at ato.gov.au/YourSuper, is the government's consumer-facing comparison platform. It allows members to compare MySuper products across funds on standardised metrics — fees, performance over various periods, investment returns, and fund size. It is not a comprehensive substitute for specialist advice on fund choice, but it provides an accessible starting point for members who have not recently evaluated their fund or who are considering consolidating multiple accounts.

Fund stapling: solving the multiple-account problem

Before 1 November 2021, each new employment relationship could generate a new super account if the member did not actively nominate their existing fund to the new employer. Over a working life involving multiple employers, this could result in several accounts in different funds, each with its own fee structure and default insurance premiums — slowly eroding the balance through duplication. The YFYS stapling reforms addressed this: from that date, a member's superannuation follows them between employers. When a new employer is required to make super contributions for a new employee, the default is to contribute to the member's existing fund rather than opening a new one. Members can still choose a different fund, but fragmentation now requires a deliberate act rather than being the automatic result of changing jobs.

For pre-retirees who have been working for decades, the stapling reform arrived too late to solve older fragmentation — those who have accumulated two, three, or more super accounts over their working life still hold those accounts unless they have actively consolidated them. Consolidation — rolling multiple accounts into one — is generally beneficial: it reduces fee duplication, simplifies management, and concentrates the balance in the best-performing or best-suited fund. The considerations before consolidating include insurance cover (super-held insurance is lost when an account is closed), investment performance, and whether any particular fund has specific features worth retaining.

The best financial interests duty

The YFYS package also strengthened the obligations on super trustees through the best financial interests duty. Previously, trustees were required to act in members' "best interests" — a broad standard that had been interpreted to allow a degree of spending on activities with indirect member benefits (sponsorships, advertising, political donations). The strengthened duty requires trustees to demonstrate that decisions are in members' best financial interests: that spending, partnerships, and other decisions produce quantifiable benefit to members, not just general alignment with the fund's brand or values. Trustees are required to document and retain records supporting their decisions.

The practical effect has been a tightening of discretionary spending across the industry — reduced advertising, fewer sponsorships, and more explicit focus on fee-to-performance metrics. Critics argue the duty is drawn too narrowly and may inadvertently constrain funds from pursuing strategies (ESG integration, for example) whose financial benefit is long-term or difficult to quantify in the short run. Whether the performance test's benchmark properly accommodates funds with large unlisted asset allocations (infrastructure, private equity) has also been debated. These are legitimate criticisms of the framework's edges, but they do not change the central message for most members: a fund that has failed the performance test twice deserves serious scrutiny.

What this means for pre-retirees

For those approaching retirement, the YFYS framework provides one input — an important and independent one — in the broader question of fund choice. Checking whether your current fund has passed recent performance tests, comparing it on the YourSuper tool against alternatives, and considering whether consolidation makes sense are all reasonable annual hygiene steps. They are not substitutes for personal advice on the more complex questions — whether a particular fund has strong retirement-phase products, appropriate pension income options, and competent financial advice services — but they are a useful starting point for a conversation that should be had.

For those who have not reviewed their super fund in several years, the YFYS data may reveal that their fund has changed substantially, merged, or now has a different fee structure than when they last looked. A few minutes spent checking the current position is time well spent.

Sources

Key takeaways

  • APRA's annual performance test compares a fund's net returns over eight years against a benchmark; funds that fail twice in a row are barred from accepting new members.
  • Members of a fund that fails the test must be notified within 28 days and have the right to switch funds at no cost.
  • Fund stapling, effective from 1 November 2021, means a member's super follows them to a new employer by default, rather than automatically creating a new account.
  • The free YourSuper comparison tool (ato.gov.au/YourSuper) lets members compare MySuper products across funds on fees, performance, and size — a useful starting point, not a substitute for personal advice.
  • The strengthened best financial interests duty requires trustees to demonstrate that spending and decisions produce quantifiable member benefit, tightening discretionary spending like advertising and sponsorships across the industry.

Frequently asked questions

What is the Your Future, Your Super performance test?

It's an annual test conducted by APRA that compares a super fund's net investment returns over an eight-year period against a benchmark reflecting the fund's asset mix. Funds that fail must notify members within 28 days; a fund that fails twice in a row is barred from accepting new members.

What is fund stapling and how does it affect me?

From 1 November 2021, a member's existing super fund follows them to a new employer by default, instead of a new account automatically being opened. This prevents new fragmentation, though accounts accumulated before that date from earlier job changes still need to be actively consolidated if you want to combine them.

How do I check if my super fund has passed its performance test?

APRA publishes results on apra.gov.au each year, and funds that fail are required to notify their members directly. You can also compare your fund against alternatives on the government's free YourSuper comparison tool at ato.gov.au/YourSuper.

Should I switch funds if mine failed the performance test once?

A single failure triggers a notification and a free right to switch, but it's a fund that fails twice in a row that faces closure to new members — that level of underperformance deserves serious scrutiny. Use the YourSuper tool to compare and consider personal advice for a full assessment of your fund's fit.

A note on advice. This article is general information only and doesn't account for your personal circumstances. Everyone's situation is different — before acting, it's worth talking it through with a licensed adviser who knows your full picture.