I’ve just finished perusing the recent Productivity Commission report on Superannuation in Australia. It’s named ‘Superannuation: Assessing Efficiency and Competitiveness – Inquiry report”. There is 700 pages of it plus 18 technical supplements, of which one alone “Investment Performance Methodology and Analysis” is 96 pages
It was pretty dry reading! (and yes, I probably do have better things to be doing with my life)
There are masses of data, analyses, assumptions and formula scattered throughout the report, and where data is not available, alternative data has been substituted. Here’s a lovely formula to calculate Benchmark Performance.
I’ve seen articles in the media since the report was published strongly urging people to only use an industry fund, rather than a retail fund or Self Managed Fund. This is due to the fact the report seems to come to the conclusion that the “average” industry fund has outperformed the “average” retail fund and SMSF over the previous 7 years.
I’ve seen articles written by Financial Planners looking to make the point that Industry Funds invest in assets that aren’t fully transparent.
None of them really get the point.
If it takes thousands of pages for the Productivity Commission to analyse the various types of superannuation funds available in Australia then what hope has the average person got if they don’t seek advice. There is actually no such thing as the “average” superannuation fund when it comes to choosing for yourself. You actually have to pick one. If you chose one that doesn’t meet your needs and objectives it doesn’t matter if it’s a retail fund, industry fund or a self-managed fund.
Seek some advice from a financial planner that isn’t aligned to a product provider (Which fund is a bank financial planner going to recommend you? Which fund is an industry fund financial planner going to recommend?) and work out what’s best for you – don’t settle for average.
If you would like to discuss your superannuation options further, give the team at Steve May Financial Services a call and start a conversation today.
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Nick Shanley, Steve May and Luke Styles are Authorised Representatives of Sensibly Pty Ltd (AFSL 533923)