Yesterday the Australian Prudential Regulation Authority released its second annual set of superannuation league tables, with 200 of the largest funds compared on their rates of return last year and over three and five years.
Figures for the 2008-09 financial year include the bloodbath caused by the GFC, and only five funds produced positive returns. For once, retail super funds weren’t shamed, and it was small retail funds, along with one of the smaller AMP funds, that occupied the top spots. All the biggest funds, including big retail funds, industry and public sector funds, all turned in dire results.
The biggest, AMP Superannuation Savings Trust, bled 13.4%; Colonial First State FirstChoice lost 11.7%, Universal Super 14.7%; the two biggest industry funds Australian Superannuation and Unisuper lost 12.4% and 9.5% respectively.
In fact none of the 80 biggest funds lost less than 6%. Industry fund the MTAA — which is threatening legal action against Adele Ferguson and Fairfax for her weekend report suggesting it was facing closure — was the biggest loser of all, coughing up over 23%.
The rolling five-year average rate of return, however, is still dominated by industry and corporate funds, with the bottom fifty nearly all retail funds. The lowest ranks of the funds on the three-year rate of return are also heavily dominated by retail funds, but some small retail funds now have the best three-year average, on the back of their strong 2009 performance.
And if you want a nice example of just how retail funds differ from industry or corporate funds, compare the performance of the retail funds offered by the Big Banks to how their own, in-house funds managed for their employees perform.
The Commonwealth Bank’s in-house Officers’ Superannuation Fund managed a 6.3% rate of return over the last five years. How did the Commonwealth Bank’s retail funds go? The Commonwealth Life Superannuation Mastertrust managed 3%; the Commonwealth Life Personal Superannuation Fund managed 3.9%.
The NAB’s in-house NAB Group Superannuation Fund A managed 5.3% over the last 5 years. How did its MLC retail super funds, including the third-biggest fund in the country, Universal Super, perform? They managed between 2.2-2.9%.
Westpac’s Staff Super managed 4%. Its retail funds managed 2.1-2.8%.
ANZ’s in-house super fund managed a four-year (not 5-year) performance of 1.1%. In the same period, its ING Masterfund managed -0.5%.
Why the difference? Do the banks not manage their customers’ funds as well as those of their own employees? Not at all. The staff funds all performed nearly as poorly — or in a couple of cases even worse — than their retail counterparts in 2009. The difference reflects the impact of fees and commissions charged by retail funds, which in-house funds and industry funds don’t impose on their members.
And the difference mounts up, year in and year out, and will keep doing so until the Government takes serious steps to curb fees and commissions.
Never mind Paul Keating’s call to bump compulsory super up to 12%. The data from the banks shows just how much more retirement income Australians would get from cutting back fees and commissions alone.
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