Industry Super Australia has accused three of Australia’s big four banks of selling retail super funds to consumers that significantly underperform their corporate funds for staff.
Drawing on the results of a recent poll conducted by Essential Research, Industry Super Australia (ISA) said the corporate funds run by NAB, ANZ and Commonwealth Bank have outperformed the same banks’ retail super funds by 1.5, 2, and 2.8 per cent, respectively.
“These differences will be of deep concern to policy makers and the general public,” said ISA chief executive David Whiteley.
“Clearly these institutions have the capacity to deliver better returns to members of the public, but their need to deliver profits to shareholders may be a stumbling block.”
Mr Whiteley said banks needed to explain “how it is the super funds for themselves can outperform the super funds they sell to the public so considerably”.
“The three million members of these public offer funds deserve to know whether the banks are putting the interests of shareholders before fund members,” he said.
After InvestorDaily asked CBA to comment on the claims, Colonial First State executive general manager Linda Elkins said “the comparisons used by Industry Super are misleading for consumers” and didn’t compare corporate and retail funds fairly.
“The average of the entire offering of the FirstChoice super trust has been used in the comparison rather than the individual FirstChoice MySuper Lifestage fund, a MySuper product offered to the public that would provide an accurate and meaningful comparison,” said Ms Elkins.
“FirstChoice Lifestage was the best performing MySuper option over one year to 31 Dec 2016 of all MySuper providers and has been in the top quartile of returns over the past three years.”
An ANZ spokesperson agreed, and said that the comparisons did not use 'like for like products or returns, and that "overly simplistic comparisons of this nature are not helpful, and in many cases can be misleading for consumers".
"It appears that in using APRA data, Industry Super Australia has compared a composite master fund level return that incorporates more than 1,984 different options across multiple products and platforms, with a single MySuper fund that has only four investment funds and a single static default fund," they said.
"Not only is this an inappropriate comparison, but investors could not invest in such a way. A fair comparison would only include a ‘like for like’ comparison of default funds – such as employee based MySuper funds."
The spokesperson said that a comparison said that when comparing like for like products, such as the retail ANZ Smart Choice Super and the ANZ Staff Superannuation fund (both MySuper funds), the retail product delivered "strong and comparable returns".
NAB did not respond to InvestorDaily’s request for comment before deadline.