Some industry funds under-performing – Sherry
Having just two weeks ago announced another review of superannuation in Australia, the Minister for Superannuation and Corporate Law, Senator Nick Sherry, has now acknowledged that some industry funds have been “consistent under-performers”.
In a submission to the Australian Industrial Relations Commission on award modernisation and default superannuation funds, Sherry pointed out that only about 10 to 15 per cent of employees who can choose a fund actually exercise a choice, meaning that most employees covered by an award have their superannuation paid into default funds.
He said that members of consistently under-performing funds would suffer serious detriment to their post retirement income prospects.
“It is of significant concern in light of their default fund status that some industry funds have been consistent under-performers,” the minister said. “Aggregated, unpublished Australian Prudential Regulation Authority (APRA) data shows that there are 24 industry funds (out of a total of about 84 such funds), potential default funds in awards, that have under-performed over the long-term.”
Sherry said this underperformance was as high as 1.6 per cent a year and the funds had a membership of around 3 million accounts in a system wide total of around 21 million accounts.
The minister’s submission hastened to add that while these 24 industry funds had under-performed relative to other industry funds nominated in awards, unpublished APRA data indicated that the industry fund sector had achieved strong long-term performance.
AUTHOR
Mike Taylor
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