POWERED BY MOMENTUM MEDIA
Undue attention on super fees: SuperRatings
There is an unjustified spotlight put on superannuation fees, with insufficient attention paid to overall investment outcomes for fund members, according to SuperRatings.
In its analysis of key trends and issues in the super industry, SuperRatings said ‘net benefit to members' is the most important indicator of member outcomes.
"While competitive fees and charges are important, the quality of fee disclosure across the industry is extremely varied," SuperRatings said.
"In SuperRatings' view, whilst fees are important, a race to the bottom in terms of fees is unlikely to deliver better outcomes for superannuation fund members."
Net benefit to members is an effective measure because it is the level of investment earnings minus fees and taxes. This also allows for comparison between active and passive structures, and sees whether a provider has added excess value to their members' accounts after fees and taxes.
The comments come even as the Financial System Inquiry argued the super system is not operating efficiently because of a lack of strong price-based competition, and consequently the industry is not able to enjoy the benefits of its scale.
"These benefits have been offset by higher costs elsewhere in the system rather than being reflected in lower fees," it said.
The inquiry also said if average fees in APRA-regulated funds came down 30 basis points, member balances and funds available for long-term investment would jump by more than $3.5 billion per annum.
Looking forward, SuperRatings believes funds will devote much of their time to assessing service providers, particularly administrators, custody and insurance providers.
"Administration continues to be a key challenge in the industry, with a lack of automation and a reduction in the number of active providers evident," it said.
It added insurance also remains a point of concern for funds, as premiums go up due to worsening claims experience and the rise of lawyer participation.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
