New figures highlight industry super fund outperformance

New data released last week by research house SuperRatings shows that the industry super fund sector has once again outperformed the retail super sector in the SR 50 Balanced Option over one, five, seven and ten year periods to 31 March 2012.

The new data shows that industry super funds achieved a median rolling return of 5.86% over the last ten years, compared to a median rolling rate of return of 3.56% by retail funds over the same period, a difference of 2.3%.

David Whiteley, Chief Executive, Industry Super Network, said: “This latest data confirms yet again that the industry super fund sector continues to deliver better long term returns on average for members than their retail counterpart.”

The new data indicates that the only period for which retail super funds slightly outperformed industry super funds was for the rolling three year period to March 2012, with retail funds achieving performance figures of 8.62% and industry funds 8.15%. This can primarily be attributed to the greater exposure to listed equity markets by retail super funds.

David commented that “the new figures provide even further impetus for the principal criterion for the selection of default funds in modern awards to be that of long term net performance”.

Industry Super Network is calling for a criterion of long term net performance in default fund selection based on the Cooper Review proposal that APRA develop a reporting standard that measures the performance of superannuation funds net of all costs, fees and taxes.

SR 50 Balanced (60-76) to 31 March 2012

For more information, visit www.superratings.com.au

Media Release: New APRA data shows industry super fund outperformance

New APRA data shows that the not for profit sector, including industry super funds, continues to deliver better returns on average for members than its retail counterpart.

Read Media Release here.

New APRA data shows industry super fund outperformance

New APRA data shows that the not for profit sector, including industry super funds, continues to deliver better returns on average for members than its retail counterpart.

Read Media Release here.

ISN applauds Superannuation Guarantee rise to 12%

The Government’s proposed increase of the Superannuation Guarantee to 12% is set to boost Australians’ retirement savings by tens of thousands of dollars. The move is to be applauded, says David Whiteley.

Industry Super Network (ISN) has congratulated the Government on the passing of legislation to raise the Superannuation Guarantee from nine to 12 per cent in the House of Representatives last week.

ISN Chief Executive, David Whiteley, said that in combination with the Future of Financial Advice and Stronger Super reforms, the new measure will improve the retirement savings of average Australians by tens of thousands of dollars.

“This new legislation moves Australia closer to a vastly improved retirement savings system,” he said.

“ISN has long advocated boosting the compulsory Superannuation Guarantee, while at the same time improving the efficiency and equity of the superannuation system through bans on commissions and improving tax incentives for low income earners.

“Increasing the Superannuation Guarantee contribution to 12 per cent will add tens of thousands of dollars to the retirement income of average Australians.

“In addition, more than 3.6 million lower income earners are set to benefit from the low income superannuation tax rebate of up to $500 per annum, once this has been passed by Parliament.”

David said that the entire package of reforms represented the most comprehensive improvement to the retirement savings system since the introduction of compulsory superannuation.

“Australians deserve a dignified retirement and these laws will complement the wider reform of the superannuation and financial advice industries to help deliver that outcome,” he concluded.

To read the speech introducing the proposed legislation into Parliament, click here.

Intra-fund advice on the rise in industry super funds

A recent survey by ISN shows that intra-fund advice services offered by industry super funds are in higher demand than ever before. Robbie Campo, Manager – Strategy, ISN, sheds some light on this important member service.

The demand for intra-fund advice services by industry super funds has been growing steadily, according to new figures.

A survey of seven industry super funds conducted by Industry Super Network in September revealed that a total of 64,184 pieces of advice was delivered to consumers in the 2010/11 financial year – representing an increase of 17 per cent on the previous year.

In recent months, intra-fund advice has been in especially high demand – most likely due to ongoing market volatility. In August 2011, when markets crashed because of the Greek debt crisis, four of the major industry super funds experienced an average increase in calls of 26 per cent compared to the previous year.

Robbie Campo, Manager – Strategy, ISN, said that the delivery of intra-fund advice by super funds is clearly meeting consumers’ needs, many of whom are simply looking for basic advice on their super to maximise their retirement savings.

“The delivery of intra-fund advice by super funds is filling an important gap in the marketplace by providing consumers with basic advice on their super. It is also helping to make financial advice available to all Australians, irrespective of their age, income or superannuation balance,” she said.

Rice Warner Actuaries predict that by 2024, limited advice (which includes intra-fund advice) will constitute over 40 per cent of all pieces of advice. [1]

A number of large surveys of investors and superannuation members have also consistently found that limited advice, such as intra-fund advice, is preferred to comprehensive financial advice, and is in fact the most sought-after form of advice in Australia. [2]

“Research tells us that very few people who earn less than $100,000 will ever visit a financial planner. Yet many people in this category will increasingly tend to call their super fund with queries related to their super investment,” Robbie said.

“By providing intra-fund advice services to members, super funds are answering a key public policy challenge of ensuring that ordinary Australians are able to access the basic financial advice they need on their super.”

With the Superannuation Guarantee proposed to move to 12 per cent and market volatility expected to continue, Robbie believes that intra-fund advice will become even more important for Australian consumers in the future. She also believes that intra-fund advice should be a compulsory service offering of all MySuper funds, as recommended by the Cooper Review.

“Australians deserve access to basic financial advice that they can trust and that they can afford. The least Australians should be able to expect from our compulsory super system is help and advice on their savings from their super fund,” she concluded.

Survey findings

Two of the topics surveyed by ISN were the most popular subject matter for intra-fund advice and how intra-fund advice is delivered. The findings are outlined below.

Topics covered in intra-fund advice

While most advice offered by industry super funds is tailored general advice, there is an increasing provision of intra-fund advice. The most common topics for which intra-fund advice is sought are:  member investment choice, insurance options, making additional contributions and transition to retirement (TTR). TTR advice is becoming increasingly provided as intra-fund advice, for members with very straightforward financial and personal circumstances and advice needs at retirement.

Delivery of intra-fund advice

Most intra-fund advice is delivered over the telephone, with members being sent a Statement of Advice following the phone-based interview (if one is required). The advice is generally modularised, although some members will elect to receive advice on more than one topic. Email was a common channel for one super fund, while another had a primarily workplace-based model for delivering intra-fund advice, where advisers attend workplaces to hold scheduled appointments with members. Some super funds also offered members the opportunity to meet a financial planner in a more traditional face-to-face interview but this would certainly not be typical for intra-fund advice delivery.

 For more information on intra-fund advice or the survey findings, click here.