Adviser identifies dodgy super fund outcomes assessments

Amid the Federal Government’s release of the regulatory underpinnings of its controversial Your Future, Your Super legislation, a South Australian academic researcher and qualified financial planner has raised serious questions about the validity of the member “outcomes assessments” being published by superannuation funds.

Mark Bastiaans, a masters research candidate at the University of South Australia, has undertaken research which concludes that the MySuper Dashboard ‘representative member’ investment return used by many superannuation funds “does not in fact accurately ‘represent’ what individual members actually earn”.

“In fact, the representation is highly inaccurate,” he claims.

“The reason why members will experience different outcomes is due to individuals account characteristics, in particular their account balance, presence, and timing of transactions and the impact different fee structures used by super funds (flat dollar and percentage based),” he wrote.

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Bastiaans said his findings were based on a study that used de-identified confidential member level data (consisting of transaction dates and categorised amounts) and Microsoft Excel’s ‘eXtended Internal Rate of Return’ (XIRR) formula to calculate a money-weighted personal rate of return for 53,770 members invested exclusively in the MySuper product of a single Registrable Superannuation Entity (RSE) between 1 July 2018 and 30 June 2019.

Bastiaans’ findings revealed the range of investment returns was 98.06% (minimum -63.90% and maximum of +34.16%).

“Using the MySuper Dashboard ‘representative member’ investment return of 7.05% as a benchmark, 84.2% of the study sample received a personal rate of return below the MySuper Dashboard investment return,” he wrote.

“The evidence from the study points to the fact that the MySuper Dashboard ‘representative member’ investment return does not in fact accurately ‘represent’ what individual members actually earn.”

“Those at the lower end of account balance earn significantly less than the ‘representative member’. Within this cohort are the young, paying insurance premiums, and those in regional and remote locations,” Bastiaans wrote.