What funds don’t want you to know?

The superannuation watchdog is butting heads with the funds management industry over an official comparison tool that could quickly and reliably allow members to assess the performance of funds.

Australian Prudential Regulation Authority (APRA) member Helen Rowell told a meeting of Australia’s biggest super funds that a comparison tool, which has been under development for more than a year, would give consumers and regulators “a clearer picture of who is, and who is not, doing a good job with members’ money”.

The tool would reveal the worst performers in the  $2.9 trillion sector, she said, according to a report in The Australian.

The super industry has been under pressure since the Productivity Commission (PC) revealed millions of members had been defaulted into funds that persistently underperform and that unwanted – and sometimes unknown – insurance products had been eroding balances. But it was the underperforming funds that was most troubling – and most costly –  with estimates that a quarter of funds had been short-changing workers by as much as $400,000 over their working lives.

Identifying the underperformers is the challenge for consumers.

“Too many members are invested in funds that consistently deliver sub-par outcomes,” said Ms Rowell, “potentially reducing members’ retirement incomes by hundreds of thousands of dollars over a working life.

“A lack of transparency and the complexity created by the sheer number of products and options on offer has hindered member engagement, and made it much harder to assess performance across the full spectrum of the industry.”

Much of the data relating to funds’ performances is available in APRA publications, but the industry has “baulked at the regulator presenting it in a way consumers can digest”, The Australian report says.

“It’s somewhat disappointing to us that the prospect of APRA presenting already publicly available data with its own lens on performance is generating a considerable amount of vocal pushback,” Ms Rowell said.

“We suspect the real concern for many trustees is the prospect of having their performance publicly exposed in a simpler, credible and insightful way by APRA – especially among those with an inkling that their place on the heat map will be at the hotter end of the colour spectrum.

“Given the important role of the APRA-regulated superannuation industry, it’s difficult to argue that stakeholders are not entitled to be given a clearer picture of who is, and who is not, doing a good job with members’ money.”

Ms Rowell repeated a statement made by APRA chairman Wayne Byers, who said: “If in this day and age a trustee cannot reliably, accurately and quickly provide information on assets, returns, fees and costs for all their products across a range of dimensions … one wonders how they will meet heightened standards for assessing the outcomes being delivered for their members.”

Are you able to comfortably compare the performance of your super or pension fund? If not, why not? Should a comparison tool be readily and freely available?

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Written by Janelle Ward

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