Evidence-backed. Sourced from APRA official performance test results (2024 and 2025), APRA corporate plans, SPG 227, ASFA transfer planning research, KPMG Super Insights 2026, Ashurst legal analysis and independent fund research. General information only — not financial advice. Before rolling over your super, consider your insurance cover, investment options and personal circumstances. Consult a licensed financial adviser if unsure. Last updated: June 2026.
⚡ Key Takeaways
- APRA isn’t seizing your super — but it is systematically pushing weak, small and persistently underperforming funds to merge, close products, or wind up entirely. APRA’s Deputy Chair has described this as a “muscular approach” to consolidating the sector, and the legal tools to force transfers exist and are being used. [1][3]
- A Successor Fund Transfer (SFT) lets a trustee move all members and assets to another fund without individual consent — as long as the trustee reasonably believes members will be in an “equivalent or better” position. Your balance, investment option and insurance can all change overnight. [7][8]
- Since the performance test began in 2021, members in products that did not pass has fallen from approximately 1 million to just 8,500 — a direct result of closures, product exits and transfers. In 2024, 37 of 192 platform TDPs failed (27 repeat); in 2025, 7 of 137 platform TDPs failed. [6][5]
- The biggest real-world risk for members in a merging or closing fund isn’t the loss of their balance — it’s insurance changes. Group insurance arrangements are often renegotiated during transfers, and you may lose TPD benefit definitions, face new exclusions, or find your cover costs more — without realising until you try to claim. [7][8]
- Three steps protect you: check whether your fund or product is in APRA’s firing line; if merging or failed, choose deliberately rather than drifting; and protect your insurance details and admin records before any transfer takes effect. [2][7][8]
APRA Is Forcing Super Funds to Close and Merge — Is Your Money Safe and What Do You Need to Do?
By The Fine Print editorial team | Last updated: June 2026 | 14 min read | ⚠️ Not financial advice
APRA isn’t seizing your super — but it is quietly shutting the weakest funds and products, and shunting members into new homes. Your balance will move. The real question is whether you move with intent or just get dragged along. Over the past five years, APRA has used its performance test, its “muscular approach” to consolidation, and the legal mechanism of Successor Fund Transfers to push hundreds of underperforming products out of existence. The result has been a healthier system overall — but for individual members caught in a merger or wind-up, the transition can change your fees, your investment option, your insurance cover and your service standards overnight. This guide explains exactly how this process works, what the real risks are, and the three steps to take if your fund is in APRA’s sights.📋 What’s in This Guide
How APRA Forces Super Fund Closures and Mergers
APRA has two main levers for pushing funds and products out of the system. The first is the annual superannuation performance test. The second is direct supervisory pressure — including directing trustees to pursue mergers or exit, and the use of enforceable undertakings — backed by the legal mechanism of Successor Fund Transfers. [1][3][7]The performance test pathway:
- First fail: Trustee must notify members within 28 days. Product stays open. [5][2]
- Second consecutive fail: Product must be closed to new members from the day after notification. Existing members can remain but APRA expects the trustee to either rectify performance or plan a member transfer to a better option. [5][2]
- Since 2021, members in failed products have fallen from approximately 1 million to 8,500 — demonstrating the real-world force of this mechanism. [6]
The Successor Fund Transfer (SFT) pathway:
- An SFT allows a trustee to transfer all members and assets to another fund without individual member consent — as long as the trustee reasonably believes members will be in an “equivalent or better” position in the new fund. [7][8]
- APRA’s guidance (SPG 227) sets expectations for how trustees should plan and execute SFTs to minimise member harm. ASFA’s 2023 transfer planning paper notes that for many small or weak funds, an SFT is the “only feasible method” of exit. [7][8]
- APRA can effectively force a transfer by directing trustees who don’t meet mandated standards to merge — Ashurst legal analysis confirms this pressure is intensifying. [3]
⚠️ Your money is not at risk of disappearing. Super fund balances are held in trust and protected under Australian law. The risk isn’t that your balance vanishes — it’s that your fees, investment strategy, insurance cover and service standards can change without you choosing them, if you don’t actively engage with the transfer process. [7][8]
Four Ways a Forced Transfer Can Hurt Members
1. You end up somewhere you didn’t choose
Under an SFT, your balance moves to the receiving fund’s default investment option unless you’ve made an active selection. Even if APRA and the trustee believe the new fund is stronger overall, the specific investment option, fee structure and service model you land in may not suit your risk profile, time horizon or preferences. The trustee’s duty is to believe you’ll be in an “equivalent or better” position in aggregate — not to guarantee that every specific feature you valued in the old fund will be replicated. Members who don’t read the transfer documents and compare the new fund’s options may simply end up in a different default, no better informed than before. [7][8][3]2. You stay in a failed product for years by doing nothing
When a product fails APRA’s performance test for the first time, you receive a fail letter. When it fails a second consecutive time, it closes to new members — but existing members can remain indefinitely. The product doesn’t automatically transfer you. APRA expects trustees to either fix performance or plan a member transfer, but these timelines vary, and the documented pattern from 2023 and 2024 shows some trustees were slow to act. If you do nothing after receiving a fail letter, you may simply continue accumulating underperformance in a product that APRA has officially deemed substandard — until either the trustee acts, or you do. [4][5][11]3. Insurance cover changes — often unannounced until it matters
Group insurance in super is one of the most underappreciated benefits many Australians hold. When a fund or product is wound up and members are transferred via SFT, the group insurance arrangements are often renegotiated with the receiving fund’s insurer. This can mean: TPD definitions change (for example, from “own occupation” to “any occupation”); exclusions or waiting periods that didn’t exist before now apply; or the cost of the equivalent level of cover increases materially. These changes may be disclosed in the transfer documentation, but in small print that most members don’t read. You may only discover the difference if you later try to make a claim and find your benefit definition has changed. [7][8]4. Operational disruption and processing errors during migration
Mergers and SFTs require system migrations: new online portals, new account numbers, new contact points, new payroll update requirements for employers. In practice, these transitions generate errors — rollovers delayed, contributions bounced, pension payments missed, member records incorrectly transferred. APRA and ASIC both expect trustees to manage these transitions carefully, and in recent years, funds that have generated significant errors during mergers have faced regulatory scrutiny. But the errors still happen, and if you’re not watching, a processing mistake in your account during a merger can go uncorrected for months. [7][8][9]What’s Happened Since 2023 and Where the Pressure Is Heading
- 2023 and 2024 performance tests — platform product clean-up: The extension of the test to trustee-directed products exposed dozens of failing platform options. NM Super and IOOF-related products featured heavily among 2023 and 2024 repeat failures. Many of those options had to close to new members and triggered strategic reviews or exits. By 2024, 37 of 192 platform TDPs failed — 27 repeat fails. [4][5]
- 2025 test — improvement but structural concern remains: Platform failures fell from 37 to 7 in 2025 (3 first-time, 4 repeat). But APRA explicitly noted that over 40% of platform products with a 10-year history still show significant investment underperformance on its broader CPPP analysis — meaning the formal pass/fail rate understates the sector’s chronic problems. [2][6]
- APRA’s “muscular approach” — pressure on small funds: APRA Deputy Chair Margaret Cole stated APRA had already directed several trustees of underperforming funds to pursue mergers, and that approximately half of small funds (assets under $10 billion) face sustainability challenges — shrinking net cash flows and declining member numbers that make independent operation increasingly difficult. [1]
- KPMG Super Insights 2026 — concentration at the top: Total super assets have grown beyond $4.5 trillion, with the top 24 APRA-regulated funds now holding the majority of assets and member accounts. This concentration makes APRA more comfortable nudging small or underperforming funds out — and more likely that a forced merger will land you in one of a handful of mega-funds. [12]
- APRA corporate plans 2024–25 and 2025–26: Both plans explicitly prioritise “superannuation sustainability and member outcomes” with focus on weak, small and underperforming funds and pressure for them to merge or exit. This is not a temporary campaign — it is embedded in APRA’s medium-term strategic agenda. [9][10]
✅ Your Three-Step Action Plan
Action 1: Find out whether your fund or product is in APRA’s firing line
Start by identifying the exact name of your super fund and the specific investment option or product you’re in — check your latest member statement or your fund’s app. Then run two searches. First: look up your product in APRA’s 2025 performance test results. There are separate tables for MySuper products (at the APRA 2025 MySuper results page) and trustee-directed products (at the APRA 2025 TDP results page) — search for your product name and check whether it passed, failed first time, or failed a second consecutive time. Second: search your fund’s name on its own website and in news sources for any “merger,” “successor fund transfer,” “product closure” or “strategic review” announcements. Many funds are transparent about planned mergers and provide member communications well in advance. If you find a planned transfer, download the member booklet immediately and read it carefully — particularly the sections covering investment options, fees and insurance. [13][2][14]Action 2: If your fund is merging or your product has failed, choose deliberately — don’t just drift
If your product has failed APRA’s performance test, treat the fail letter as a clear signal requiring a decision — not as a piece of mail to file away. Use the ATO’s YourSuper comparison tool (for MySuper products) and APRA’s TDP results to compare your product’s long-term net returns and fees against alternatives. Decide whether to switch investment options within the same fund to a stronger-performing option, or whether to roll over your entire balance to a different fund with a clean performance record and lower fees. If your fund is doing a Successor Fund Transfer, ask the fund directly: what will my new investment option be, what are the fees, and what happens to my insurance? Then compare the proposed destination fund against alternatives. You are not required to accept the default transfer destination — you can roll over to a fund of your own choice before the SFT date. The fund must give you reasonable notice and the opportunity to act. [7][8][2][5]Action 3: Protect your insurance and admin details before any transfer takes effect
Before any merger, SFT or product closure takes effect, take five minutes to download or screenshot three things from your current fund account: your current insurance cover details (type of cover — life, TPD, income protection — the sum insured for each, the benefit definitions, and any specific exclusions that were waived at the time you joined); your beneficiary or death benefit nomination status; and a recent transaction history and balance snapshot. After the transfer completes, log back into your new fund account and verify: your balance has transferred correctly; your contributions from your employer are arriving in the new fund; and your insurance cover is in place at the level and cost you were told to expect. Pay particular attention to TPD definitions — the shift from “own occupation” to “any occupation” definitions is a common change in group insurance renegotiations that can materially affect what you can claim. If anything looks different from what was disclosed, lodge a written complaint with the fund immediately while the evidence is fresh. [7][8][9]❓ Frequently Asked Questions
Is my super safe if my fund is forced to close?
Yes — your balance is held in trust and protected by law. The risk is to your fees, investment option and insurance cover during the transfer, not to the balance itself. Active engagement protects you. [7][8]What is a Successor Fund Transfer?
A legal mechanism allowing a trustee to transfer all members to another fund without individual consent, provided members will be in an “equivalent or better” position. Governed by APRA SPG 227. [7][8]How do I know if my fund is being forced to close or merge?
Check APRA’s performance test results for your product. Search your fund’s website and news for merger or SFT announcements. Your fund must give you advance notice and documentation of any planned transfer. [2][5][9]What happens to my insurance in a merger?
Often renegotiated — TPD definitions, exclusions and premiums can all change. Check your transfer documentation carefully against your current policy. Lodge a complaint immediately if the new cover is materially different from what was disclosed. [7][8]Can I choose a different fund instead of the merger destination?
Yes — you can roll over to any complying super fund before the SFT date. You’re not locked into the default destination. Compare fees, options and insurance before deciding. [7][8]⚖️ The Fine Print Verdict
APRA’s consolidation agenda is, in broad terms, working. The number of members in poorly-performing super products has fallen from approximately 1 million to 8,500 since 2021. The super system is measurably stronger, more concentrated and better governed than it was five years ago. But the mechanism that produces this improvement — performance tests, SFTs, merger pressure — generates real risks for individual members caught in the transition. Insurance cover can quietly change. Investment options can shift. Processing errors during system migrations can sit unnoticed for months. And members who assume “APRA is handling it, I’ll be fine” often end up in a default option in a new fund that’s no better suited to their circumstances than the one they left. The consolidation wave isn’t slowing — KPMG’s 2026 data shows assets concentrating at the top 24 funds, and APRA has flagged that half of small funds face sustainability challenges. If you’re in a small or underperforming fund, the question isn’t whether your fund will face pressure — it’s whether you’ll be ready when it does.
👉 Check your fund’s performance test status this week, search for any merger announcements, and download your current insurance details so you have a record to compare against — before any transfer takes effect.
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- Investment Magazine, “APRA to continue ‘muscular approach’ to transform super sector,” investmentmagazine.com.au (March 2022)
- APRA, “2025 annual superannuation performance test — trustee-directed products,” apra.gov.au
- Ashurst, “Australia’s superannuation industry is feeling the pressure for consolidation,” ashurst.com
- Super Review, “Super performance test delivers pleasing results: 2024 APRA,” superreview.com.au
- APRA, “APRA releases 2024 superannuation performance test results,” apra.gov.au (2024)
- APRA, “APRA releases 2025 superannuation performance test results and product data,” apra.gov.au (2025)
- APRA, SPG 227 “Successor fund transfers and wind-ups,” apra.gov.au
- ASFA, “Transfer planning paper,” superannuation.asn.au (June 2023)
- APRA, “APRA corporate plan 2025–26,” apra.gov.au
- APRA, “APRA corporate plan 2024–25,” apra.gov.au
- Wallace Partners, “APRA super fund performance test results released,” wallacepartners.com.au
- KPMG, “Australian superannuation industry insights and analysis,” kpmg.com.au (2026)
- APRA, “2025 annual superannuation performance test — MySuper products,” apra.gov.au
- APRA, “2025 annual superannuation performance test — accessible version of dashboards,” apra.gov.au
- APRA, Circular II.A.6 “Winding up a superannuation fund,” apra.gov.au
- ATO, “Winding up APRA-regulated funds,” ato.gov.au
- Australian Retirement Trust, “Winding up an SMSF,” australianretirementtrust.com.au
This article is general information only and does not constitute financial advice. Before rolling over your super or making any decisions about a fund merger or SFT, consider your insurance cover, investment options, fees and personal circumstances. Consult a licensed financial adviser before making changes to your superannuation. Information is current as at June 2026, based on APRA official performance test results, SPG 227, ASFA research, KPMG Super Insights 2026 and independent analysis. The Fine Print 🇦🇺 is not affiliated with APRA, ASIC, ASFA or any fund mentioned.