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Above-median returns on bank-owned super funds highly unlikely - new findings image
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Above-median returns on bank-owned super funds highly unlikely - new findings

Published: 25 May 2017

The chances of an above-median return on your for-profit retail superannuation fund are very slim, new analysis reveals.

An Industry Super Australia (ISA) analysis of ten year APRA performance data shows an extraordinary 97 per cent of member accounts in bank-owned public offer super funds have below median returns.

Furthermore the analysis shows three quarters of all public offer bank-owned super fund assets are in bank-owned super funds with bottom quartile performance.

In contrast, three quarters of all public offer not-for-profit industry super fund assets are in industry funds with top quartile performance and 92 percent above median.

ISA’s chief executive, David Whiteley said the findings are the clearest indication yet that profit orientation is a detriment to member outcomes.

“Consistent outperformance by industry super funds over bank-owned super funds reflects the differences between for-profit and not-for-profit business models, which over the last two decades have seen significantly different member outcomes.”

Whiteley said that today’s data highlights concerns over the banks profit driven vertically-integrated business models, which seem to be eroding member’s retirement savings.

“The fact is, running a super fund to profit a parent bank sits very uneasily with the interests of members and the social policy objectives of compulsory superannuation,” he said.

It is now time for the banks to disclose the profit from compulsory super and the regulator to investigate the chronic underperformance of bank owned super funds.

Key findings from the ten-year performance league include:

  • 97 per cent of all public offer bank-owned fund member accounts are in funds with below median returns
  • 94 per cent of all public offer bank-owned fund assets are in funds with below median returns
  • ‘Not-for-profit’ superannuation funds collectively contributed $42.9 billion (96 per cent) in above median returns in the ten years to 2016
  • In comparison, ‘for-profit’ retail funds delivered a $25.4 billion drag in below median returns in the ten years to 2016
  • The five largest public offer bank-owned and AMP funds, each with more than $30 billion in assets, performed well below the median.

Industry Super’s Performance Matters paper draws from APRA’s Annual Fund-Level Superannuation Statistics, June 2016 (released February 2017).

David Whiteley is available for interview. Media contact: Phil Davey 0414 867 188

Industry Super Australia Pty Ltd ABN 72 158 563 270, Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514. Past performance is not a reliable indicator of future performance.

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