97% of member accounts in bank-owned public offer superannuation funds are in funds with below median returns, according to Industry Super Australia.
“The chances of an above-median return on your for-profit retail superannuation fund are very slim,” said ISA, based on an analysis of ten years of APRA data.
Three quarters of all public offer bank-owned super fund assets are in the bottom quartile for performance, according to the same analysis. Whereas three quarters of public offer not-for-profit industry super fund assets are in the top performance quartile.
ISA Chief Executive, David Whiteley, said the findings were the clearest indication yet that the profit orientation of bank-owned super funds was a detriment to members.
“Consistent outperformance by industry super funds over bank-owned super funds reflects the differences between for-profit and not-for-profit business models, which over the last two decades have seen significantly different member outcomes,” he said.
“The fact is, running a super fund to profit a parent bank sits very uneasily with the interests of members and the social policy objectives of compulsory superannuation.”
ISA said, in the research report, that this underperformance raised questions about the suitability of the large financial institutions – the ‘Big 4’ banks and AMP – to steward compulsory superannuation assets.
According to the analysis it appears that a profit orientation may have a greater impact on returns than the scale of funds.
“The five largest public offer bank-owned and AMP funds, each with more than $30 billion in assets, performed well below the median while 13 public offer industry funds with less than $5 billion in assets achieved above median returns.”