Not so super: funds shy and retiring about results
Sydney Morning Herald
Friday August 21, 2009
HOW good is your super fund? If you wouldn't have a clue, welcome to the club.While a bit of legwork will soon get you the information needed to compare new cars, plasma TVs, or even homes, comparing super funds can be a frustrating exercise in conflicting messages and obfuscation.Even though we have a compulsory super system covering about 90 per cent of working Australians, to date there have been no official figures to allow you to line your fund up against a range of others and decide for yourself whether it is a good deal or a dud.This has led to widespread inertia, the vast majority of fund members simply sticking with the default option of their employer's nominated fund. They feel disconnected from their retirement savings, and run the risk of remaining in a poorly performing fund that could severely limit their retirement options.Most fund members do not realise that even a one percentage point difference in performance can mean a $100,000 or more difference to their final retirement benefit. The research company SuperRatings recently calculated that an investor in the worst performing balanced fund it surveyed would have been 33 per cent worse off than an investor in the best performing fund over the past five years alone.Private ratings agencies in recent years have brought much-needed transparency to superannuation by producing monthly reports of the latest fund returns.But negotiating these reports is not always easy for the lay person, and the industry seems to go out of its way to muddy the waters. It argues investors should "compare apples with apples" but there is no consensus how funds should be classified and compared.The APRA data attempts to short-circuit this complexity by reporting the rate of return for the whole fund. So a fund with more than 2000 investment options €“ as one Macquarie fund has €“ shows a rate of return for all those options combined.You could argue, as some parts of the industry have, that this does not reflect the real experience of fund members. A more valid criticism is that the figures published yesterday show returns to June last year, and much has happened to fund returns since then. As the Association of Superannuation Funds of Australia points out, it would also help if consumers knew where each fund's assets were invested.But for consumers starved of meaningful information, it is at least a start.
© 2009 Sydney Morning Herald
