Summary of key assumptions
There could be a lifetime of difference in your final retirement payout if you belong to an Industry SuperFund. Examples presented in the Industry SuperFunds television commercials and associated marketing show in stark dollar terms the significant amount of difference an Industry SuperFund can make to your final retirement payout.
We have commissioned SuperRatings to do the research and modelling for our advertisements. SuperRatings is a ratings and research company that specialises in analysing superannuation funds, their investment returns, their fees and the relative benefits they offer to their members.
The amounts shown in our commercials and on this website (unless otherwise stated) are based on fee projection modelling of the average fees of a sample of two types of superannuation funds - Industry SuperFunds and retail super funds. The modelling shows the effect that fee differences alone have on the growth of your superannuation. Differences in fees may change in the future and this would alter the outcome. The figures shown as a result of the modelling are not predictions or estimates of actual outcomes. The effect of fee differences on your super balance will vary between individual super funds and be affected by the fund’s performance.
SuperRatings also undertakes Net Benefit modelling which analyses average net returns (investment performance less fees) for a sample of Industry SuperFunds and a sample of retail super funds.
Performance and fee projection modelling
The Industry SuperFund investment options included in the SuperRatings’ modelling are:
- Australian Super Balanced Option
- AustSafe Super Balanced
- AUST (Q) Default Option
- CareSuper Balanced
- Cbus Core Strategy
- FIRSTSUPER Balanced
- HESTA Core Pool
- HOSTPLUS Balanced
- legalsuper Moderate
- LUCRF Super Balanced
- Media Super Balanced*
- MTAA Super Balanced
- NGS Super Diversified
- REI Super Trustee Super Balanced
- Spec Super Balanced
- TWUSUPER Balanced
* As at 1 July 2008 Print Super and Just Super merged to become Media Super.
The retail super funds (retail master trust) investment options included in this model are:
- AMP CustomSuper - AMP Balanced Growth
- AMP SuperLeader - SuperLeader Growth
- AON Master Trust - Balanced - Active
- ASGARD Employee Super - SMA Balanced
- AXA Super Directions Bus - Multi-manager Balanced
- BT Lifetime Super Employer - BT Multi-manager Balanced
- Colonial FirstChoice Emp - FirstChoice Moderate
- ING Corporate Super - ING Balanced
- IOOF PS Corp - IOOF Multimix Balanced Growth Trust
- Mercer Super Trust Corporate - Mercer Growth
- MLC Masterkey Business - Horizon 4 - Balanced Portfolio
- Navigator SuperSol - Emp - Pre Select Growth Fund
- Optimum - Intech Growth Trust
- Spectrum Super - United Capital Growth Fund
- Suncorp Easy Super - Suncorp Balanced
- TOWER ARC Corporate - TOWER Balanced Growth Fund
Key assumptions for modelling and calculations
List of assumptions
- Starting age
- Varies and is disclosed in our commercials and on this website, where applicable
- Age of retirement
- 65 years
- Starting income
- Varies and is disclosed in our commercials and on this website, where applicable
- Salary increase
- 3.5% per annum
- Starting super balance
- Varies and is disclosed in our commercials and on this website, where applicable
- Investment Returns
- Fee Projection Modelling: 7.225% per annum, (gross of taxes and fees at 8.5%) compounded annually but with taxes of 15% deducted. Performance (Net Benefit) Modelling: Modelling is based on actual reported returns over the stated period.
- When are investment returns credited to members’ accounts?
- Annually
- Superannuation Guarantee Contribution
- 9% of Gross Salary. Assumes no salary sacrifice or voluntary contributions.
- Contribution tax
- 15%
- When are contributions assumed to be made?
- Quarterly in arrears with 4th quarter contribution being received on the last day of the year.
- When are fees assumed to be deducted?
- Annually
- Tax rebates
- Tax rebate of 15% is assumed on fees deducted from members’ accumulation accounts.
- Employer asset size
- Members’ accumulation accounts are assumed to be in a ’small’ employer size of $150,000 in funds under management (FUM) at the start of calculation. Employer size FUM increases at 11.6% per annum.
- Inflation
- 2.5% per annum
- Average Industry SuperFund fees*
- See commentary below
- Average retail super fund fees*
- See commentary below
- Insurance
- No deductions made for insurance premiums
- Date of modelling
- Performance and Fee Projection Modelling: 31 December 2009
All key assumptions have been drawn from the model provided on the ASIC website except for average fees and average returns.
* Fees
- All fees are those published in sample funds’ most recent product disclosure statements.
- Average Industry SuperFund fees and retail super fund (retail master trust) fees are an average of chargeable administration, asset management and investment management fees.
- Contribution fees, entry fees, exit fees, adviser fees or any other fees charged by Industry SuperFunds and retail super funds are excluded from this model.
Returns
The ASIC superannuation calculator assumes returns are provided either before fees and taxes (8.5%) or after fees and taxes (7.47%) assuming tax of 6% (being 15% less estimated credits). We use 7.225% after taxes (at 15% flat) but before fees so that we can model in the different fees which apply in the ‘average’ retail super fund and Industry SuperFund scenario. We believe that this is an appropriate figure to use in projecting average returns.
The return of 7.225% is used for modelling outcomes for both the average Industry SuperFund and the average retail super fund. This is done to illustrate the effect that fee differences alone have on the growth of your super investment.
Variable model assumptions
SuperRatings uses a number of different scenarios in its modelling. The variable assumptions are the person’s age, starting balance in their super fund and their annual salary:
| Scenario |
Annual salary |
Starting balance |
Starting age |
Average Industry SuperFund |
Average Retail Super Fund |
| Construction |
$58,000 |
$50,000 |
40 |
$323,415 |
$279,088 |
| Hospitality |
$23,000 |
$8,300 |
25 |
$216,456 |
$181,567 |
| Aged Care |
$45,000 |
$20,000 |
35 |
$267,936 |
$230,620 |
| Executives |
$130,000 |
$110,000 |
45 |
$544,888 |
$481,082 |
| Security Guard |
$43,500 |
$28,593 |
25 |
$471,667 |
$391,183 |
| Mid Management |
$75,000 |
$50,000 |
34 |
$526,435 |
$448,851 |
| High Net Worth* |
$200,000 |
$150,000 |
40 |
$1,064,246 |
$975,507 |
Manufacturing
- Ladders |
$46,800 |
$35,000 |
33 |
$356,953 |
$301,819 |
Manufacturing
- Spanners |
$59,100 |
$74,600 |
37 |
$453,826 |
$384,075 |
| Mechanics |
$46,333 |
$47,000 |
30 |
$455,831 |
$378,936 |
| Over a 40 year working life |
$50,000 |
$20,000 |
25 |
$485,709 |
$407,821 |
| Multi Industry Men |
$61,200 |
$69,000 |
41 |
$363,037 |
$312,581 |
| Multi Industry Women |
$51,500 |
$35,500 |
39 |
$279,283 |
$241,291 |
*The High Net Worth scenario is modelled on a larger employer size of $5,000,000 in funds under management (FUM) at the start of calculation.