A member of a sub-standard Industry Superannuation Fund could be potentially $170,000 worse off than a member of a best performing fund because of the current industrial system, according to the Financial Services Council (FSC).
Using Australian Prudential Regulation Authority (APRA) and modern awards data, an analysis by the FSC found subscale funds managed $94 billion and left up to 1.7 million members potentially hundreds of thousands of dollars worse off in retirement. The FSC said these funds made up 153 (30.2%) of modern award superannuation listings and 33 funds managed less than $10 billion in funds. The average performance of the 33 funds over 10 years was 4.5%.
The FSC said this was 0.8 % lower than the average 5.3 % performance of all ‘growth’ options in the market for both industry and retail funds, and 1.4% lower than the performance of the best performing MySuper products.
The weakest performing fund returned 2.7 per cent over 10 years, managed less than $1 billion, and was listed in two modern awards. FSC chief executive, Sally Loane, said: “If this many Australian workers were enabled by law to languish in poorly paying jobs with working conditions way below their peers, for as long as 40 years, there’d be outrage across the entire community”.
Many can’t change funds because of the current industrial laws governing default super, and many are chronically disengaged and disinterested. Either way, the system needs to change. The of prevalence of these industry funds in the default system was a major public policy issue that has been failed to be addressed by government.
Talk to us if you believe your fund is underperforming. We are happy to provide strategy and advice on how you can switch to a fund that will deliver stronger returns and a more comfortable retirement.
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