Super industry splits over APRA super performance recommendation

Industry and retail funds have split over the recommendations of the Australian Prudential Regulation Authority (APRA) review in regard to publishing comparable performance data, with the former arguing such a move would be in members’ best interests while the latter disagreed.

Both the Australian Institute of Superannuation Trustees (AIST) and Industry Super Australia (ISA) were in favour of the recommendation to regularly publish data on the performance of all APRA-regulated super funds as well as objective performance benchmarks.

“A lack of comparable performance data, notably for non-default ‘choice’ super products where more than $1 trillion of super savings is invested, has been the Achilles heel of our super system,” AIST head of advocacy, Alisa Goodwin, said. “For too long, members of these high fee, poorly performing funds – most of which are retail funds - have been kept in the dark.”

ISA acting chief executive, Matthew Linden, said that it previously argued for such changes, and that their enactment would help members’ vulnerable to exploitation.

The retail fund sector was notably reticent on the change, however. While the Association of Superannuation Funds of Australia (ASFA) welcomed broader changes to deploy a more effective operating model for APRA, it warned that the superannuation specific recommendations needed more consideration.

“Simplistic approaches to assessing member outcomes, such as reliance on league tables of short-term fund performance, reduce the efficacy of the superannuation system and go against the interests of fund member,” ASFA chief executive, Martin Fahy, said on the issue of performance reporting.

This difference of opinion came as industry funds increasingly gained a reputation for outperformance of their retail counterparts, with both large numbers of members and corporate mandates going their way.

ASFA said that the recommendations represented a change of the long-standing focus of the regulator to be on member outcomes, cautioning that such changes, if not implemented properly, may not ultimately be in members’ best interests.