Retail super funds return 2% less a year than industry funds

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super fund fees, investment returns, disclosure, product dashboards, retail super funds, industry super australiaIndustry super funds have returned an average of 2% per year above ‘bank-owned’ super funds, according to Industry Super Australia, building the case for better disclosure of fees and investment returns.

Analysis of APRA data by Industry Super Australia found that between 30 June 2004 and 30 June 2015 industry super funds had an average annual Rate of Return (ROR) 2.03% higher than that of “bank-owned super funds”. Over this period industry funds returned on average 7.67% per year, compared to 5.64% for bank-owned funds.

“The data demonstrates why proposed ‘dashboards’ for super choice products and investment options, which clearly inform consumers of fees and returns, must not exclude the majority of bank owned and retail super choice product options,” said Industry Super Australia.

“Banks have lobbied the government to exempt an estimated 72% of super choice product options offered by bank-owned funds from having to disclose their fees, all underlying costs, risk and net returns in the blunt, standardised ‘product dashboard’ format.”

“These carve outs, included in draft legislation, will prevent Australians from making informed choices about their super,” said Industry Super Australia CEO David Whiteley.

“It is anti-competitive and protects poorly performing bank-owned super funds from greater levels of transparency. It’s clear these funds oppose full disclosure of their investment returns because of their uncompetitive performance.”

Mr Whiteley said this gap in returns should be of concern to government and called for bank-owned funds to fully disclose their investment returns.

“The average underperformance of bank-owned funds results in many thousands of dollars less in retirement savings for Australians and more pressure on the economy in pension outlays,” he said.

Assistant Treasurer Kelly O’Dwyer has denied that bank-owned funds have a special exemption under the product dashboard rules.

Additionally, while Industry Super Australia has called for bank-owned funds to fully disclose investment returns, the ISA submission in response to the draft legislation called for exemptions from disclosure for “direct and unlisted property, infrastructure and private equity”.

Recent analysis commissioned by AIST has found that the investment fees charged by retail funds are up to 300% higher than those charged by industry super funds.

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