By John Collett
Consumers need to have online access to tables showing how their super fund returns compare to others and it needs to be free.
One of the biggest factors that people have over control in achieving a comfortable retirement is selecting a good-performing super fund.
There’s a huge difference in returns between the best and worst performers and over the long periods of time during people save for their retirement that makes a big difference on their standard of living in retirement.
Financial authorities tell consumers to compare funds but that’s easier said than done.
There are a number of private sector researchers but they are, naturally, in the business of monetising their research. They do offer some limited comparisons for free, but they are far from comprehensive.
For example, some will show the performances of funds, but only over the past five years.
That’s of limited use as most experts think that a fund’s performance needs to be compared over time periods of at least seven years.
Over shorter periods, conditions in investment markets will favour particular asset allocations over others.
Others will compare only say, retail funds, those run by the banks and insurers, but leave out the generally better-performing industry funds out of the comparisons.
Most of these researchers will provide more comprehensive comparisons – for a fee. But even then they rely on the funds to provide their performance data to the researchers, with poor performers withholding their data.
The Australian Prudential Regulation Authority (APRA) can compel funds to provide their data in a timely manner.
The regulator does produce super fund performance statistics, but the data is not useful to consumers.
Most super funds will have more than a dozen or more investment options, ranging from those that spread the money between asset classes to asset class specific options.
Most people are with their funds’ MySuper-compliant options, which come with consumer safeguards as they are for those members who don’t choose who manages their super.
APRA is reporting the returns of MySuper options, but the performance is reported for each quarter rather than ranked over the four years that MySuper has been in existence.
The regulator is well aware of how important it is to get reliable data out to the general public at no cost, particularly as the private sector is unlikely to fill the gap.
In a speech last November, APRA deputy chairman Helen Rowell, said: “Enhancements to the reporting regime, which we will explore through our consultation package, seek to provide more detailed and comparable superannuation data for APRA to analyse and publish.”
Part of the issue is that super funds need to report their returns to in a way that is standardised and APRA is consulting with the superannuation industry about that.
Source: The Sydney Morning Herald
