The Australian Council of Trade Unions (ACTU) has supported an industry super fund call for an inquiry into the performance of smaller SMSFs.
Ian Silk, CEO of industry super fund AustralianSuper, told the Conference of Major Superannuation Funds that the industry fund sector would like a “revamped and smaller SMSF sector” following a review.
The ACTU supports such an inquiry, pointing to the Productivity Commission report which found SMSFs with less than $500,000 in assets performed significantly worse on average than larger funds. Though the Commission also found that large SMSFs had “broadly similar net returns” to APRA-regulated super funds.
The ACTU says that “too many workers are duped into starting an SMSF when the experts know accounts with relatively small balances will not perform well”.
“The Productivity Commission report raises questions about the value being provided to customers by SMSFs and this should be thoroughly investigated.”
“There should be consistent scrutiny of any super funds which are not providing for members,” said ACTU Assistant Secretary Scott Connolly.
“The banks sell SMSFs to low super balance workers because they can charge massive fees, take a large cut of investment returns with little to no scrutiny.
“Industry funds have been shown to be consistently out-performing all other types of funds – the funds which are failing their members should be exposed to extensive scrutiny.”
It is unclear why industry funds and the ACTU are making this call now, given the Productivity Commission report was released in early January.
Another inquiry is unwarranted: SMSFA
The SMSF Association has rejected the call for another superannuation inquiry as “totally unwarranted”.
SMSF Association CEO John Maroney noted that neither the 2010 Cooper Review, the 2014 Murray Inquiry, or the Productivity Commission recommended restrictions on SMSFs.
“It has been clearly demonstrated that the PC’s analysis showing SMSFs with less than $500,000 are underperforming the APRA-regulated funds used highly questionable data about SMSF investment returns and costs, as well as poor methodology, to reach this conclusion,” Maroney said.
“Certainly, there are more than enough question marks about the PC’s analysis to dismiss any call for another inquiry, especially when the PC, in its final report, said there should be no barriers to individuals setting up an SMSF and that these funds provided a ‘key source of choice’ in Australia’s increasingly concentrated superannuation sector.”
“In addition, this type of simplistic analysis ignores the non-financial benefits that many SMSF members believe they can only achieve in overseeing their own fund, including greater control, flexibility and transparency.”
BGL “extremely disappointed” by comments about SMSFs
SMSF and compliance software maker BGL it “extremely disappointed” by the comments about SMSFs from Ian Silk.
BGL Managing Director Ron Lesh said: “Ian like most CEO’s and Directors of Industry and Retail Funds simply don’t get it!”
“People move out of large funds because of the lack of transparency, the huge salaries paid to executives, the unrepresentative boards, the hugely wasteful advertising expenditure but most of all the desire to control their own destiny,” he said.
“Silk is using data from the Productivity Commission that is simply not correct!”
“It seems to me that Ian is concerned when he sees so many large balances leaving his fund. Maybe he should be looking at the reasons why rather than attacking a part of the super industry that is performing well, is independent and is meeting the needs of its members.”