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Five star performances predominateThe bar has been raised but so have fund performances
A MP has emerged the winner in the Heron Partnership’s latest Quality Star Ratings Survey of corporate superannuation funds, while industry funds have emerged to dominate the top 10 positions in the retail funds sector.
The Quality Star Ratings Survey differentiates itself from research undertaken by other ratings houses because it takes into account factors beyond simple returns, including people and processes, insurance, communications and ancillary services.
The latest survey places AMPCustomSuper and AMP SignatureSuper at the top of the five star quality rating board for corporate superannuation funds, followed by ANZ Super Advantage, Aon Master Trust, Asgard Employee Super and AustralianSuper Corporate.
However, within the retail funds arena, AGEST emerged at the top of the five star quality rating board, followed by AMP Flexible Lifetime Super, Aon Master Trust — Personal Division, Asgard Elements Super — Pension, Asgard eWrap Super Pension and then Asset super.
Commenting on the survey results, Heron Partnership managing director Chris Butler said the superannuation market was particularly competitive at present, with consumers emerging as the major winners overall from improvements in the quality of superannuation products and lower insurance costs.
“However, on the other side of the ledger, many products have increased their investment management fees, which are not always completely visible to members,” he said.
Butler said there had also been an overwhelming number of products that introduced investment performance management fees.
He said fees and charges could give rise to material differences between some products.
“The impact of fees and charges over a 25-year membership period applied by the 33 five-star rated retail superannuation products, for example, could result in the lowest cost product, AGEST, producing a retirement benefit some 15 per cent greater than the average retirement benefit produced by the 33 products, assuming the same contribution and investment returns,” Butler said.
However, he said some serious improvements had been detected with respect to insurance, with many funds either conducting formal insurance tenders or negotiating directly with their insurer to extract maximum benefit from what represented a competitive environment.
Butler said improvements achieved by the funds included a higher level of cover for the same cost, total and permanent disablement (TPD) definition choices, higher maximum death benefits and improvements in accident death and TPD cover provisions.
He said of all the corporate products assessed based on a range of features and flexibility, ING Corporate Super, BT Lifetime Super — Employer Plan and Legg Mason’s The Corporate Superannuation Master Trust had achieved the highest level of ratings.
Butler said Cbus, AGEST and CARE had achieved the highest insurance ratings among retail products.
He said other factors that improved ratings included making financial planning more accessible through call centres and face-to-face meetings, greater focus on transfers within funds, clearer Product Disclosure Statement documentation and better communications.
AUTHOR
Mike Taylor
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