ISA urges scrutiny of bank-owned super funds
Industry Super Australia (ISA) has sought to use the latest Australian Prudential Regulation Authority (APRA) data on superannuation fund returns to claim the need for greater scrutiny of why bank-owned funds persistently underperform their industry fund counterparts.
The ISA sought to back its claims by publishing returns data extracted from the APRA material covering five, 10, and 11 years, within which industry fund returns outperformed retail funds by between 1.72 and 1.86 per cent.
However, while this is consistent with data recent published by research Chant West, that data also showed that over seven years, retail funds had outperformed industry funds, with Chant West principal, Warren Chant noting that industry funds had a higher allocation to unlisted assets.
ISA deputy chief executive, Robbie Campo sought to use the APRA data to validate her organisation's defence of existing default fund arrangements, saying the figures highlighted "the importance of having a safety net of high performing funds listed as default funds in awards".
"The large portion of workers who don't choose a fund or rely on their employer to choose a fund from a shortlist should be able to be confident that their retirement savings are secure with a high performing fund that is run only to benefit them," she said.
"The Productivity Commission's review into superannuation efficiency provides an opportunity to update evidence that the persistent average underperformance of bank-owned super funds is due partly to shareholder interests being placed ahead of fund members," Campo said.
She claimed the latest performance figures raised a genuine question about "whether retail fund trustees can balance the conflict between generating profits for their parent entity shareholders versus the long-term interests of their members".
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