ISA talks up collaborative, large scale investing

Industry Super Australia (ISA) has attributed the outperformance of industry superannuation funds to their "collaboratively investing in large scale, long-term infrastructure projects".

The attribution has come from ISA chief executive, David Whiteley who has used the latest data released by SuperRatings to defend current default superannuation arrangements as providing strong consumer protection.

He said the latest SuperRatings' monthly data had shown that, on average, industry super funds had recorded a superior performance of more than two per cent over the last 12 months in a volatile market.

"The reliable outperformance of industry super funds over bank-owned funds stems from a number of factors, in particular a business model that returns all profits to members and the innovative approach of collaboratively investing in large scale, long-term infrastructure projects that boost the economy and produce solid, strong net returns," Whiteley said.

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"The chronic underperformance by bank-owned super funds highlights concerns over the banks' vertically integrated business models which continue generate huge profits while delivering lower returns to their superannuation members," he claimed.

"The ‘for-profit' culture reflected in the banks' business strategy and sustained underperformance raises questions of the appropriateness of their involvement in superannuation, given super is a mandatory savings system central to Australia's long-term economic and social prosperity," Whiteley said.

"Amid calls for a royal commission into a multitude of financial sector scandals, the big banks must be held accountable for their practices and explain the cause of their chronic underperformance."

He claimed the SuperRatings' results reinforced the need for "a safety net of high-performing default super funds to ensure members' retirement savings are being maximised — a key objective of our super system".

"Default super arrangements for the millions of Australians who choose to rely on this system should provide strong consumer protection," Whiteley said.

"The default system should only include funds with a demonstrated track record of strong performance and exclude the underperformers.

"Default fund members should have peace of mind that their savings will be shielded from poor net returns, ticket clipping and inflated related party transactions."