Industry superannuation funds have delivered better returns than bank-owned super funds over the past 10 years, according to new data.
Industry funds in the SR 50Balanced Optiondelivered an average annual return of 5.11 per cent during the decade ending 31 May, according to SuperRatings.
That compares to 2.94 per cent per annum for bank-owned super funds – a difference of 2.17 percentage points.
Industry funds also outperformed their bank-owned counterparts over one year, three years, five years and seven years.
| 1 year | 3 years | 5 years | 7 years | 10 years | |
|---|---|---|---|---|---|
| Industry super funds | 9.78% | 7.92% | 10.34% | 8.71% | 5.11% |
| Bank-owned super funds | 7.57% | 5.98% | 8.42% | 6.47% | 2.94% |
| Outperformance | 2.21 points | 1.94 points | 1.92 points | 2.24 points | 2.17 points |
Underperformance can be costly
People who choose bank-owned funds over industry funds could have $220,000 less at retirement, according to calculations by Industry Super Australia (ISA), an association representing industry funds.
This assumes 40 years of work at an income of $80,000, as well as average annual returns of 4.5 per cent versus 6.5 per cent.
ISA public affairs director Matt Linden said the latest SuperRatings results highlight the benefit of choosing an industry fund over a bank-owned fund.
“With pension access tightening, compulsory superannuation is becoming increasingly central to the wellbeing of Australians as they age,” he said.
“This chronic under-performance of retail funds, which hold just over a quarter of all super savings, should be a big concern for forward-thinking policy-makers.”
