The habitual underperformance of bank-owned retail funds hurts members and the Australian economy, Industry Super Australia (ISA) believes.
An ISA analysis found over a 19-year period, Australia's retirement savings pool would have been $105 billion higher if retail funds had matched industry super fund returns.
ISA chief executive, David Whiteley, said: "Bank-owned and retail super funds are a drag on Australia's retirement incomes and national savings".
ISA found the two key reasons for underperformance were investment philosophy, and fund structure and governance.
"Reform of the sector must be based on retaining a safety net of the best performing super funds for the estimated eight million workers that do not choose their own fund," Whiteley said.
"National super savings are worth $2 trillion and super investment is now a major driver of economic activity. The evidence is also telling us that a super system run only to benefit members would also deepen our capital base, boost the economy, and raise the living standards of retirees across the board."
Amid a challenging market environment, three super fund CIOs have warned against ‘jumping at shadows’.
The professional body is calling for the annual performance test to transition to a two-metric test, so it better aligns with the overarching duty of super fund trustees to act in the best financial interests of their members.
AustralianSuper, Rest, and HESTA agree on the need to retain and enhance the test, yet they differ in their perspectives on the specific areas that warrant further refinement.
Australia’s second-largest super fund has confirmed it is expanding its presence in the UK following significant investment in the region.
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