Industry funds performing better says new research

New research issued by Industry Funds Services (IFS) yesterday has added fuel to an already heated debate within the industry over the comparative ‘net benefit to members’ of industry funds and retail master trusts.

The latest IFS research concludes that Australians could “miss out on a significant amount of retirement savings if they don’t look at choosing an industry super fund”.

It suggests that on average industry super fund members received more dollars in their accounts after fees and taxes over the past one, three and five years to June 30, 2005.

It follows previous research commissioned by the IFS for one, three and five years to March 31, 2005, which also found that industry funds deliver significantly more retirement dollars to members than retail master trusts.

This research by Superratings partly formed the basis of a controversial advertising campaign on ‘net benefits to members’ launched by IFS to coincide with the launch of choice of superannuation fund.

Industry Super Funds spokesperson, Garry Weaven said the results of the latest research confirm that “however you split the market, industry super funds continue to outperform the retail master trust sector.

“With an industry super fund, everyone can access low fees and strong performance, because industry super funds are run only to profit their members.”

Weaven also used the research to call on retail funds to verify their claim that they offer lower fees than those published in their product disclosure statements.

“We call on them or the regulator, to prove these claims through a public audit process, with full, random audits of claimed fees and costs.”

The latest IFS research finds that on average industry super funds delivered $791 more dollars to member accounts over one year than retail master trusts, $2,966 more over three years and $5,516 more over five years.

Conducted by researcher Rainmaker Information, the results are applicable to a member earning $50,000 per annum, with an opening balance of $50,000 and in an employer plan size of $10 million.

Industry super funds delivered $20.50 of earnings for every dollar of fees taken out, while the master trusts operating in that market delivered only $8.20.

Over three years the comparison was $15.10 against $5.60, and over five years industry super funds again outperformed - $11.30 against $4.00.

In the personal super market, industry super funds delivered $24.90 over one year of earnings for every dollar of fees taken out, while the master trusts operating in that market only delivered $5.30.

Over three years the comparison was $17.80 against $3.20 and over five years, industry super funds again outperformed - $12.90 against $2.00.

Industry super funds also deliver $1,119 more dollars over one year in their members’ accounts than personal mastertrust investors, where members invest in growth options.

The advantage was also found to be repeated over the longer term, with industry super funds delivering $6,274 and $10,535 more dollars in their members’ accounts over three and five years, respectively.

The research also found that industry fund members would have paid on average $441 less in fees than they would in an average master trust. Over five years, the advantage for an industry super fund would have been $2,486.

In the personal market, industry fund members would have paid $980 less in fees than the average member of a retail personal master trust. The five year fee differential would be $4,493 in favour of industry super fund members.

Industry funds were also found to have the advantage in growth-oriented personal super funds, delivering $1,119 more dollars to members’ accounts than master trusts over one year.