Industry super funds outperform retail funds over 10 years

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Industry super funds consistently outperform bank-owned retail super funds, Industry Super AustraliaIndustry super funds have consistently outperformed retail super funds over 1, 3, 5, 7 and 10 year periods, according to Industry Super Australia, based on data from SuperRatings.

Over a 10 year period the statistics show that industry super funds have outperformed “bank-owned funds” by 1.66%, 6.75% to 5.09%.

The difference is smaller for 1 year returns, with industry funds earning 8.30% and retail funds 7.75%, or 0.55% lower.

The results were welcomed by Industry Super Australia, with Deputy Chief Executive Robbie Campo saying they “tell an emphatic story, that if your retirement savings are with an industry super fund, they are in good hands.”

“It has been consistently the case that industry super funds have recorded better median results than those from the big banks according to this independent research,” he said.

According to Mr Campo these results show how vital the default superannuation safety net is, with eight out of ten Australians not actively selecting their own super fund.

“The outperformance of industry super funds it is a clear sore point for bank-owned funds, who perennially respond by using their weight to lobby relentlessly to weaken the safety net and remove any performance filter.”

Mr Campo said that “the default safety net ensures a merit based process is used to select the best quality funds, a process recommended by the Productivity Commission and now endorsed by the Financial Systems Inquiry.” However the Financial System Inquiry report recommended changes to the default super system:

Subject to the findings of a review of the efficiency and competitiveness of the superannuation system, Government should introduce a formal competitive process to allocate new workforce entrants to MySuper products. The competitive process could be an auction or tender. Current default fund members would also benefit as funds would not be allowed to price discriminate between their existing and new MySuper members. This competitive process would replace the industrial relations system in selecting default superannuation funds for workers.

Source: Financial System Inquiry Final Report

The figures are based on SuperRatings’ figures for December 2014, Fund Crediting Rate SR50 Balanced Funds. SuperRatings says that “past performance is not a reliable indicator of future performance.”

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