Millions of Australian super fund members are being “kept in the dark” about the poor performance of their retail superannuation funds, the Australian Institute of Superannuation Trustees (AIST) has claimed.
AIST said it is concerned, based on research commissioned from SuperRatings, that poor disclosure means super fund members are unable to compare their fund’s performance.
The research compared over 600 MySuper and Choice investment options, on a like-for-like basis. It found that the “vast majority” of retail master trusts underperform not-for-profit funds with similar asset allocations.
AIST said: “According to the report, the median profit-to-member fund in the Choice Sector outperformed the median Retail Master Trust in one, three, five, seven and ten years to 31 December, 2016 across nine out of eleven different investment classes. This included balanced options, high growth, diversified fixed interest and property options.”
“But perhaps the most blatant examples of Choice failing members is where the fees charged by the average Choice retail fund for their balanced investment option is substantially higher than in the MySuper arena, especially on higher account balances, despite the fact the two funds have asset allocations within the same range.”
AIST senior policy advisor Karen Volpato said this pointed to the need for improved reporting and consumer protections.
“In a compulsory super system where consumers are free to make a choice, there is an onus on regulators to ensure that investment options can be easily compared,” Ms Volpato said.
“We need to collect better data and we need to ensure disclosure requirements are meaningful, honest and fair. As it stands now, choice is delivering sub-optimal outcomes for those who end up in for-profit retail funds.”
Ms Volpato said the current efforts to improve disclosure did not far enough, given the exemptions granted to the Choice sector.
AIST supports the publication by the regulator of a league table of long term performance of both MySuper and Choice funds.
Recently released analysis of APRA data by Industry Super Australia found that 97% of members with accounts in bank-owned public offer super funds are in funds with below median returns.