Mistrust in retail super sees industry super funds grow
A recent report in The New Daily examined a trend of superannuation fund members deserting retail funds and moving their retirement savings into consistently better-performing industry funds.
The report attributed the retail funds’ declining membership and the relative growth of industry funds’ membership to scandals and negative publicity in the retail fund sector in recent years including, but not limited to, the explosive fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The report also noted, however, that the relative growth in the value of each sector was also attributable to investment performance, with net returns for industry superannuation funds consistently outperforming retail funds every year since 2011 – continuing a historical record of more beneficial returns in the industry fund sector.
The relative ethical and financial performance of the retail and industry fund sectors is perhaps not a surprise considering the genesis and purpose of each. Retail funds sell a financial product with the ultimate aim of generating profit for shareholders of the institutions that sell them – in most cases the big banks or other scandal-ridden institutions like AMP and IOOF.
Industry superannuation funds, on the other hand, have governance structures that ensure equal employer and employee representation on trustee boards, and are run for the sole purpose of benefitting fund members. There is no overt motive to skim profits for shareholders because there are no shareholders, only members. Rather than being dreamed up in a corporate board-room, industry superannuation funds are the result of campaigning by Australian unions over decades, to try to ensure every working Australian has a decent retirement income.
Industry funds such as HESTA and First State Super, to which a majority of VAHPA members belong, are also at the forefront of efforts to ensure that members’ funds are invested in ways that recognise and take responsibility for the environmental, social and governance ramifications of those investments.
HESTA and First State Super both have online account access and mobile apps available via the App Store or Google Play which allow members to quickly and easily check account balances and investment mix.
VAHPA also encourages members to take an active interest in superannuation investment mix, noting that both funds have specific ethical investment options, including HESTA’s Eco-pool which aims to invest in companies that demonstrate best practice sustainability performance relative to peers, and First State Super’s SRI (socially responsible investment) options which are screened for ethical, labour, social, environmental and governance performance.