The widening performance gap between industry and retail superannuation funds is “alarming”, according to Industry Super Australia (ISA).
Pointing to the latest figures by the Australian Prudential Regulation Authority (APRA), ISA said not-for-profit industry funds outperformed bank-owned retail funds by a widening margin of 2.89 per cent over one year, 2.44 per cent over three years, and 2.13 per cent over five years.
ISA chief executive, David Whiteley said while it was well known that industry funds dominated the performance tables, it was less known that the performance gap between industry and retail funds was widening.
“For those Australians who entrust their savings to a bank-owned super fund, the trend is alarming,” he said.
“For the average income earner a two per cent performance gap may be a difference of around $200,000 at retirement. The new figures show the performance gap edging dangerously close to three per cent.”
He noted that retail super fund underperformance was the elephant in the room in public policy debates.
“Policy-makers serious about strengthening the retirement income system, must look at cross-selling, profit flows and performance within vertically-integrated financial institutions,” Whiteley said.