Sent: 01-02-2011 11:09:03
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APRA exposes poor super fund performance
About two weeks ago the Australian Prudential Regulation Authority released its Annual Superannuation Bulletin for June 2010.
The following table compares the existing super landscape in June 2010 with that which applied in June 1995 -- a space of 15 years.
One can clearly see where growth has been.
The APRA document also contained information about average returns across the various different segments.
Corporate super funds returned an average of 3.9% per annum over the ten years to June 2010. The corresponding figures for retail and industry super funds were 2.5% and 3.9% p.a. Public sector schemes returned an average of 4.2% per annum.
But before anyone begins to use this data as evidence of their sector's bond fides, it needs to be recalled that during the same period inflation averaged 2.55% p.a.
Additionally the ASX 200 All Ordinaries Index for the same period returned 2.1% p.a. The ASX 200 All Ordinaries Accumulation Index returned just over 6% per annum. (These returns are before any investment costs.)
Of course it is dangerous to talk average returns based on various segments of the super industry given all the different ways that superannuants can invest within each super fund.
Nevertheless in my view it is here that perhaps the biggest danger lurks for the professionals working in the super industry. Presumably some investors in large super funds are seeing the result mentioned above and are wondering if there is a better way for them. Perhaps they're also noticing that the range and costs of index based ETFs are substantially less than the costs in nearly all large super funds.
Can the super industry sustainably argue that larger compulsory super contributions are essential because Australians are retiring with insufficient investable savings (arguably true) when based on one interpretation it's not immediately apparent that the super industry is necessarily adding much value itself?
Perhaps the market will see the end of excessive fees based on percentages of assets.
The media has been reporting that perhaps the Government is looking again at its ability to provide some of the new super tax concessions including the proposed Super Guarantee increase.
Finally please consider purchasing a copy of "A How To Book Of Self Managed Super Funds". You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
The 4th edition was released just before Christmas.
For details of the changes made from version 3 to version 4 visit: http://www. http://www.atcbiz.com.au/r.php?r=8mz1024
As you'll see from the list there have been many changes.
Two purchase options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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