The weak performance of super funds owned by banks and wealth management companies has cost investors $75 billion in the past 15 years, says a report that ups the ante in the union-linked funds' challenge to further deregulation of super.
As banks eye the $1.4 trillion super pool as a key source of future profits, research by Industry Super Network says for-profit funds' returns lagged their peers by 2 per cent between 1996 and 2011.
The research, to be published today, also casts doubt on regulators' long-held view that historical performance cannot predict future returns.
If accepted by the government, this finding could frustrate retail funds' efforts to grab a bigger share of the lucrative market managing the billions in retirement savings of workers on industrial awards.
Using figures from the Australian Prudential Regulation Authority, the research found retail funds returned an average of 3.84 per cent a year between 1996 and 2011. This was more than the rate of inflation, but less than the 4.01 per cent available through term deposits.
Non-profit providers - industry funds, public-sector funds and in-house corporate funds - returned more than 5.5 per cent. Public-sector funds posted the best returns - 6.47 per cent.
Had the retail sector matched the returns of non-profit funds, the report said the nation's pool of retirement savings would be $75 billion larger.
''If we'd had that extra 2 per cent, we would be in a very different position as a country. That's just more capital being invested here and overseas for our benefit,'' ISN's chief economist, Sacha Vidler, said.
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