Industry super funds back past performance into the future
The Industry Super Network (ISN) has renewed its call for the Government and agencies to utilise long-term performance data when considering and developing superannuation regulation and policy.
The ISN has made the call on the back of new, updated research conducted by ISN chief economist Dr Sacha Vidler, in which it claims to show that (on average) retail super funds have underperformed not for profit funds by more than 2 per cent a year over the 15 years from 1996 to 2011.
As well, it claimed that at 3.84 per cent over 15 years, average retail fund returns were lower than "a naïve benchmark investment strategy" and even fell short of annual term deposits over the same period.
Commenting on the updated research, ISN chief policy officer Matthew Linden said underperformance compounded over time, with dramatic impact.
"Over the 15 year period, if retail super funds had earned industry super fund returns, Australian retirement savings would currently be $75 billion higher," he said.
Linden said the findings had to be taken into account as the Government moved to the implementation phase of the significant superannuation regulatory review process, including the selection of default funds under modern awards.
He also pointed to recent Deloitte Access Economics research indicating there was persistence of performance of individual funds and said this meant a good performing fund in one period was likely to be a good performing fund in a subsequent period.
"The conventional thinking around super fund performance is that past performance is not a reliable indicator of future performance," Linden said.
"However, this new research - which has been based on rigorous long-term data - clearly shows that there are a number of factors which lead to consistent outperformance by super funds."
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
