Chief executive Bernie Dean has criticised the government after it weakened performance benchmarks to only include the last year’s administration fees, instead of an eight-year average.
“Millions of Australian workers unknowingly stuck in a dud super fund will be the biggest losers from the government’s sneaky backflip on performance tests that were meant to clean them out of the system,” Mr Dean said.
“Some of the worst performing funds could take advantage of the government’s sneaky backflip and pass the test when they may otherwise have failed, leaving millions of Australians unaware that they’re with a dud fund and could get a better deal elsewhere.”
Research conducted by Industry Super found that 13 of the top 20 benefactors are for-profit funds, which some will see an improvement in performance by more than 10 basis points.
The fund also claims that the the change by government could result in manipulation of the performance test.
“A fund could cut its last year of administration fees but lift its investment charges by an equal amount and get a boost to its benchmark score, gaming the test but leaving members paying the same high fees,” Industry Super said in a statement.
“The government initially excluded administration fees from the performance test, which are lucrative profit-generators for retail funds. These last-minute changes will allow some funds to whitewash years of administration fee gouging.”
Mr Dean added: “The government is letting some of the biggest dud funds off the hook and it will be their members that will pay the price with less in retirement savings, compared to what they’d get if they switched to a better performing fund.”
Meanwhile, consultation on the Your Future, Your Super’s portfolio holding disclosure regulations is open now and closes on 31 August.
Neil Griffiths
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
