Official figures released this week reveal the performance gap between industry and retail superannuation funds is widening.
The Australian Prudential Regulation Authority (APRA) released its Quarterly Superannuation Performance publication this week, and the results show industry super funds continue to outperform retail funds by a considerable margin.
In the past financial year, industry funds delivered an average return of 10.7 per cent, compared to 7.8 per cent for super funds, a gap in performance of 2.9 per cent.
The three-year average shows industry funds returning 8.1 per cent annually, compared to 5.7 per cent from retail funds, a gap in performance of 2.4 per cent.
Industry Super chief executive David Whiteley described the widening performance gap as ‘alarming’.
“It is well known that not-for-profit industry super funds dominate the performance league tables. Less known is the apparent widening performance gap between industry and retail super funds,” he said.
“For those Australians who entrust their savings to a bank-owned super fund, the trend is alarming.
“For the average income earner, a two per cent performance gap may be a difference of around $200,000 at retirement. The new figures show the performance gap edging dangerously close to three per cent.
“This is a concern for regulators monitoring the system; governments footing pension bills; and, most importantly, Australians saving for their retirement.”
He noted that retail fund underperformance was the elephant in the room in public policy debates.
“Policy makers serious about strengthening the retirement income system, must look at cross-selling, profit flows and performance within vertically-integrated financial institutions,” Mr Whiteley said.
What do you think? Are you in an industry super fund? If not, will you consider switching after seeing these figures?