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YFYS does not address retail super funds’ underperformance
The Government’s proposed Your Future Your Super legislation stops short of addressing the underperformance across the superannuation sector, the Australian Institute of Superannuation Trustees (AIST) believes.
AIST pointed to data from the Australian Prudential Regulation Authority (APRA) released this week that found over the five years to December 2020, profit-to-member super funds, on average, outperformed retail funds by 23%.
AIST chief executive, Eva Scheerlinck, said this concentrated retail fund underperformance needed to be urgently addressed by the government and regulator.
She said the YFYS legislation stopped short of this as it only prescribed the annual performance test to default MySuper products, which on average tended to perform better.
“A one or two percentage differential in annual investment returns has a huge impact on the financial outcome for members in retirement,” Scheerlinck said.
“It should be legislated that every super product is subject to annual performance testing. Any exclusion simply lets underperforming funds escape scrutiny and eats away at member returns.”
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Vanguard Super has reported strong returns across most of its investment options, attributed to a “low-cost, index-based approach”.
The fund has achieved double-digit returns amid market volatility, reinforcing the value of long-term investment strategies for its members.
Australian super funds notched a third consecutive year of strong returns, with the median balanced option delivering an estimated 10.1 per cent over the 2024-25 financial year, but an economist has warned that the rally may be harder to sustain as key risks gather pace.
AustralianSuper has reported a 9.52 per cent return for its Balanced super option for the 2024–25 financial year, as markets delivered another year of strong performance despite the complex investing environment.
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