The Industry Super Network (ISN) has now turned to research generated by its own chief economist to claim people would be better off putting their money in the bank than into a retail superannuation product.
Having previously used independent third party companies such a Rice Warner, Rainmaker and even Newspoll, the ISN has this time used research undertaken by its in-house chief economist, Dr Sacha Vidler, to claim retail super funds do not typically pass on the benefits of scale to their members and pay above market rates for in-house services.
The release of Vidler’s research coincides with the ISN having significantly ramped up its multi-million television advertising campaign and as the Government seeks to put the finishing touches to its Future of Financial Advice and Stronger Super legislative packages.
Releasing the broad findings of Vidler’s work, ISN chief policy officer Matt Linden claimed that as a result of not passing on the benefits of their scale, retail super funds returns to members had lagged those of not for profits by an average of nearly two per cent a year.
Linden pointed out that Vidler’s research had compared the average performance of "for profit" and "not for profit" funds over a 14-year period, utilising data published by the Australian Prudential Regulation Authority (APRA).
"This research shows that the Australian retail superannuation sector is yielding for the most part unacceptably poor returns to its members," he said. "It is extraordinary that the practices of major retail super funds over a long period of time have reduced the average returns of their members to the point where their super would be better invested in the bank."
Vidler’s research acknowledges that asset allocation has been a significant driver of net returns, with an allocation to major unlisted asset classes having a positive effect on average and an allocation to foreign assets and foreign currencies having a powerful negative effect.
