Retirement
Retail v industry: Is the super performance gap worrying?
Data released by APRA this week has shown the gap between average annual returns between retail super funds and their industry fund peers has widened, but should members be concerned?
Retail v industry: Is the super performance gap worrying?
Data released by APRA this week has shown the gap between average annual returns between retail super funds and their industry fund peers has widened, but should members be concerned?
Earlier this week the prudential regulator published its superannuation statistics for June 2017, which lobby group Industry Super Australia (ISA) said highlighted a disturbing trend.
David Whiteley, the chief executive of ISA, said the gap in performance between not-for-profit industry super funds and their bank-owned retail peers was growing, according to the data released by APRA.
“It is well known that not-for-profit industry super funds dominate the performance league tables. Less known is the apparent widening performance gap between industry and retail super funds,” he said.
ISA’s analysis of the June statistics found that industry funds outperformed retail funds by 2.13 per cent over five years, 2.44 per cent over three years, and 2.89 per cent over one.
“For those Australians who entrust their savings to a bank-owned super fund, the trend is alarming,” he said.
“For the average income earner a 2 per cent performance gap may be a difference of around $200,000 at retirement. The new figures show the performance gap edging dangerously close to 3 per cent”.
Mr Whiteley said fund members and policy makers should be concerned by this and look at how cross-selling and profit flows within the retail fund market affects returns.
However, the Financial Services Council (FSC), the lobby group representing retail funds, told Nest Egg the data doesn’t tell the whole story, and that the use of averages can actually mask individual fund performance.
“Averages are misleading and the fund level data often cited is even more so,” a spokesperson for the FSC said.
“It includes all the investment options offered by retail platforms, including low yielding cash and bonds; which are designed to protect capital rather than post stellar returns.”
The spokesperson said that APRA’s calculations even found the performance of MySuper products across both the retail and industry segments was “broadly equal” and policy makers faced more pressing issues.
“As you would expect, there are some strongly performing industry funds and strongly performing retail funds. There are also poorly performing funds in both categories,” the spokesperson said.
“The challenge for policy makers should be enabling people to switch from a poor fund to a better fund, regardless of whether they are industry or retail.”
According to APRA’s data, the best performing fund in the two segments of the market was a retail fund, with a net investment return of 3.57 per cent, followed by an industry fund with a net investment return of 3.56 per cent.
However, the data also showed the worst performing fund in the two market segments was a retail fund with net investment return of 0.58 per cent, while the worst performing industry fund delivered a net investment return of 1 per cent.
RELATED ARTICLES
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Rest welcomes progress on ‘Payday Super’ reform
Rest, one of Australia’s largest profit-to-member superannuation funds, has welcomed the Australian Government’s release of draft ‘Payday Super’ legislation, which aims to align Superannuation ...Read more
Superannuation
SuperAPI and Humanforce partner to improve superannuation compliance for one million Australians
Superannuation engagement platform SuperAPI has partnered with human capital management provider Humanforce to streamline payroll and superannuation contributions for more than one million Australian ...Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Rest welcomes progress on ‘Payday Super’ reform
Rest, one of Australia’s largest profit-to-member superannuation funds, has welcomed the Australian Government’s release of draft ‘Payday Super’ legislation, which aims to align Superannuation ...Read more
Superannuation
SuperAPI and Humanforce partner to improve superannuation compliance for one million Australians
Superannuation engagement platform SuperAPI has partnered with human capital management provider Humanforce to streamline payroll and superannuation contributions for more than one million Australian ...Read more
