Bank super returns lag behind not-for-profit funds

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If your superannuation is held by a bank-owned fund, the value of your retirement savings may not have grown at the same rate as a not-for-profit fund, according to new data.

Analysis of the monthly SR50 Balanced Index from SuperRatings by Industry Super Australia (ISA) has found that as of 31 January 2018, industry super funds have on average outperformed bank-owned retail funds by 3.29% over one year; 3.49% over three years; and well over 2% over five, seven and ten year periods.

Average annual rate of return to 31 January 2018

1 year 3 year 5 year 7 year 10 year
Industry super funds 12.7% 8.3% 10.0% 8.8% 6.2%
Bank-owned super funds 9.4% 4.8% 7.1% 6.2% 4.0%
Outperformance: 3.29% 3.49% 2.94% 2.66% 2.21%

Source: ISA analysis of SuperRatings Fund Crediting Rate Survey, SR50 Balanced (60-76) Index, January 2018

Industry Super Australia public affairs director, Matt Linden, said that the results highlighted the differences between the business models of bank-owned and industry super funds:

“Industry super funds send all profits back to their members, and this is reflected in better retirement savings returns.”

“Bank-owned retail funds serve two masters, splitting returns between shareholders and members.”

“Two per cent doesn’t seem like much, but over a lifetime it may add up to tens of thousands of dollars more – or, sadly, less – at retirement.”


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