With superannuation funds and master trusts having begun reporting their returns for the 2003-04 financial year, a campaign is emerging aimed at dropping the performance of pooled superannuation trusts (PST) as a measure of expected super fund returns.
The campaign was started by the executive chair of Industry Fund Services, Garry Weaven, who wrote to journalists in early July claiming the performance of PSTs represents a misleading gauge of super fund performance and that theme is being taken up by the managing director of Sydney research firm, SuperRatings, Jeff Bresnahan.
The campaign appears to be an early manifestation of the evolving choice of fund debate and a bid by the industry funds movement to clearly differentiate and explain the relative performance of their products.
Weaven makes no bones about the fact that he believes “sales commission-motivated financial planners and accountants are unlikely to reveal the truth”.
Bresnahan says the ongoing quoting of PSTs as an accurate measurement for super fund returns has to stop because PSTs are no longer broadly relevant.
“Ten years ago, most superannuation funds invested their assets through fund managers’ PSTs, hence the then relevance of the PST surveys,” he says. “However, over the last decade, funds have moved away from PSTs into sector specialist managers and alternative asset classes, to the point now where the average balanced investment option within a super fund looks nothing like the average PST.”
Bresnahan says what is really important is that ordinary Australians cannot access PSTs, because they are a wholesale investment pool designed for institutional investors.
“Hence, when a member sees a PST quoted in the media, the retail equivalent of the product may well be returning up to 1.5 per cent lower than the quoted wholesale figures,” he says.
Bresnahan says that for a member to compare their super fund performance against the quoted PST surveys is akin to comparing what you pay for a car against what a large employer can get the same car for using fleet discounts.
“The two cannot, and should not be compared,” he says.
Weaven says the performance of PSTs is actually a relatively poor proxy for the performance of actual super funds and certainly cannot be relied on in any comparison of the likely performance of commercially operated superannuation master trusts with industry superannuation.
“With the recent passage of the Federal Government’s choice legislation, these sorts of technical distinctions, which have huge implications for the end benefits that super fund members receive, will need to be highlighted in responsible media coverage,” he says.
