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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.
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.
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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.
The profit-to-member super fund’s MySuper default option has returned 9.85 per cent for the financial year 2024–25.
Colonial First State (CFS) has announced solid double-digit returns for its MySuper balanced and growth equivalent funds during the financial year.
The super fund’s Future Saver High Growth option delivered an 11.9 per cent return for the financial year 2024–25, on the back of a diversified portfolio and actively managed investment strategy.
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The problem with averages, like a good suit, they hide a thousand sins.