26 September 2023

Like for like: Superannuation comparisons can pay off

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By Lucy Dean*

Industry Super Australia has updated its “Compare the Pair” campaign in the hopes a more detailed timeframe comparison will empower consumers.

The new campaign compares three, 10 and 15-year outcomes, while the original campaign, introduced in 2005, looked at one comparison timeframe for retail and industry funds.

Industry Super Australia (ISA) argued that the three comparison periods will allow fund members to better understand how various funds perform over different time periods.

According to its modelling, the average person who switched from a retail fund to an industry fund 15, 10 or three years ago would have accrued a higher balance.

It gave the example of a sales representative on an average salary with $74,600 in superannuation.

ISA’s modelling suggested they would be more than $5,000 better off if they had switched three years ago, more than $20,000 better off if they had switched a decade ago and more than $54,000 better off if they had switched 15 years ago.

This modelling is based off SuperRatings analysis of the 16 industry superfunds ISA advocates on behalf of, as compared with between 45 and 147 retail super products, depending on the timeframe.

“We know that many people don’t spend much time thinking about their super,” ISA Chief Executive, David Whiteley said.

“The Compare the Pair campaign helps people do the maths simply and quickly.”

However, the new campaign — which will appear nationally — follows historical concerns that it does not provide a “like for like” comparison.

The corporate regulator, the Australian Securities and Investments Commission (ASIC), revealed in 2014 that ISA would amend the campaigns to include a note that past performance is no guarantee of future rewards, and would clarify the terms “Average Retail Super Fund” and “Average Industry Super Fund” by sharing details about the samples used.

Speaking at the time, then ASIC Commissioner, Greg Tanzer said, “ASIC was concerned that consumers may be misled by the advertisements that ran from February to May this year.”

“We are pleased that ISA has worked cooperatively with ASIC and put forward a suitable proposal to address our concerns.”

However, a year later the concerns resurfaced after Tasmanian Liberal Senator David Bushby asked ASIC whether it would be concerned about industry participants sharing calculators that did not provide “like for like” comparisons.

Mr Tanzer and ASIC Deputy Chairman, Peter Kell responded by suggesting that Senator Bushby was referring to ISA’s campaign, and said they would be interested in investigating, depending on the circumstances of the complaint.

Mr Tanzer added that the critical element was how information was presented to consumers and whether they were misled.

* Lucy Dean is an Australian multimedia journalist with Momentum Media.

This article first appeared at www.nestegg.com.au.

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