Super reporting standards need improvement

superannuation funds master trusts industry funds retail investors IFSA director mercer

15 August 2002
| By Jason |

INDUSTRY reporting standards fall short in providing fair comparisons in the area of superannuation funds, according to Chant West Financial Services director, Warren Chant.

Chant’s comments came as part of his presentation at the Investment and Financial Services Association (IFSA) conference where he said that IFSA standard 6S made it difficult to compare the performance and returns of corporate, industry and public offer superannuation funds.

The reason for this, according to Chant, is the reporting standard requires a deduction of fees, but this is usually at the maximum level, and since not everyone is charged fees at this level the end results are incorrect.

“Scale in many cases drives fees down so it is wrong to deduct full fee figures on many superannuation funds,” Chant says.

He also says that flat member fees, while simple to administer, are not being deducted from performance figures and thus would differ when compared with corporate master trusts.

This is an important issue, he says, since there are 12 million people involved with retail master trusts, 1.4 million in corporate super and seven million people involved with industry funds.

“Clearly there is a large group of people affected. Retail investors cannot compare fairly between the public offer funds and industry funds,” he says.

Another problem with reporting fees and performance figures is that most corporate and industry funds compare their returns with Mercer or Intech reports and surveys with a wholesale focus.

“Members see wholesale performance figures, but then pick up the retail media and see a different set of figures. Master trusts are not compared with those surveys, but they should be as performance of each of them is nothing without relativity,” Chant says.

He went on to say the costs of member protection in many funds is taken from returns, which is a hidden cost in those funds and in some cases even comes from earnings, which is also not disclosed.

“A better model that should be adopted across the board is not to deduct costs, including fees, before performance, which would allow for a full comparison of fees and performance figures,” he says.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 2 weeks ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 2 weeks ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 2 weeks ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

6 days 2 hours ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

3 weeks 5 days ago

The Reserve Bank of Australia's latest interest rate announcement has left punters disheartened on Melbourne Cup Day....

5 days 1 hour ago