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Assumptions: Compare the Pair tool

Accumulation Net Benefit model assumptions for: Compare the Pair advertising, the Compare the Pair tool and general performance claim in advertising campaigns.

ISA Pty Ltd (ISA) has commissioned SuperRatings Pty Ltd (SuperRatings) to undertake the research and modelling for some of ISA’s advertisements. SuperRatings is a ratings, research and insights company that specialises in analysing superannuation funds, their investment returns, their fees and the relative benefits they offer to their members.

The Accumulation Net Benefit model, prepared by SuperRatings, calculates the variance in earnings and fees between Industry SuperFunds and retail super funds (also known as retail master trusts) over different time periods, with the default comparison being the 5, 10 and 15 years to 30 June 2024.

Background to the Accumulation Net Benefit model

Sample Set: The sample set used in the modelling contains the 7 Industry SuperFunds that participate in the ISA marketing campaign and the retail super funds which are actively tracked by SuperRatings (as shown in the below table), including superannuation investment products that are open and those that are closed to new members but continue to hold assets.

As at 30 June 2024, the number of retail super products included in the sample set as at each year in the comparison period is:

Year Retail super products Year Retail super products Year Retail super products
2005 36 2012 62 2019 133
2006 42 2013 72 2020 138
2007 44 2014 88 2021 136
2008 42 2015 112 2022 87
2009 53 2016 115 2023 75
2010 54 2017 121 2024 68
2011 57 2018 129

 

Information about the Accumulation Net Benefit model

  • The model uses the ‘main Balanced option’ being the fund’s largest Balanced option where 60% to 76% of the fund’s assets are invested in growth investments. This is generally the fund’s default option. Where a fund does not have a Balanced option, the option closest to SuperRatings benchmark range of 60% to 76% growth investments is used. This is done for each product in the sample set.
  • The model uses return and fee data that is submitted by funds to SuperRatings, made publicly available by funds or contained within formal fund disclosures as at 30 June each year.
  • Using the starting account balance and salary, the contributions, earnings and fees are calculated using 30 June data each year to derive the closing account balance at the end of each year.
  • The closing account balance for the previous year is then used to calculate earnings and fees on the account in the following years with the process being repeated for each year of the comparison.
  • The net benefit for each product refers to the cumulative earnings less fees for the relevant comparison period.
  • The average net benefit of Industry SuperFunds is calculated based on the average of all investment returns and fees across each year within the comparison period for the sample set. We refer to this as the ISA sample set.
  • The average net benefit of retail super funds is calculated based on the average of all investment returns and fees across each year within the comparison period for the sample set as at each year. We refer to this as the RMT sample set.
  • The net benefit is calculated for each product which has sufficient return and performance history information available over the entire comparison period. Where this information is not available, those products are excluded from the calculation.
  • The model assumes no additional contributions or withdrawals over the relevant comparison period.
  • The model will be updated annually with 30 June figures (available in approximately October each year).
  • Modelling was performed on 14 October 2024 using data as at 30 June 2024.

Other assumptions for the Accumulation Net Benefit model

Salary increase

3.5% per annum.

Investment Returns

Performance (Net Benefit) modelling is based on actual reported returns over the stated period.

When are investment returns credited to members’ accounts?

Annually.

Superannuation Guarantee Contribution

The Superannuation Guarantee rate used for each year’s calculation is in accordance with the Superannuation Guarantee (Administration) Act. The modelling assumes no salary sacrifice or voluntary contributions.

Contribution tax

15%

When are contributions assumed to be made?

Quarterly in arrears (i.e. the first contribution is made 3 months after joining the fund)

When are fees assumed to be deducted?

Annually.

Tax rebate

A tax rebate of 15% is assumed on fees deducted from members’ accumulation accounts

Employer asset size

Members’ accumulation accounts are assumed to be in a ‘small’ employer size of $150,000 in funds under management (FUM) at the start of calculation.

Inflation

2.5% per annum

Fees

All fee information is taken from the sample funds’ product disclosure statements or other formal disclosures at the end of each year in the calculation. Contribution fees, entry fees, exit fees, fee caps/tiering, additional adviser fees or any other fees charged are excluded from this model.

Insurance

No deductions are made for insurance premiums

Table: Net benefit modelling 

Timeframe First Super net benefit Retail super fund net benefit First Super account balance today Retail super fund account balance today Net benefit difference 
Last year $4,409 $4,942 $59,084 $59,617 -$533
Last 3 years $11,304 $7,296 $75,181 $71,173 $4,008
Last 5 years $21,962 $18,861 $95,043 $91,942 $3,101
Last 7 years $38,391 $32,729 $121,333 $115,671 $5,662
Last 10 years $72,275 $57,859 $171,339 $156,923 $14,416
Last 15 years $163,584 $137,538 $292,490 $266,445 $26,046

As at 30 June 2024.

 

Issued by SuperRatings Pty Ltd (SuperRatings) ABN: 95 100 192 283 a Corporate Authorised Representative (CAR No.1309956) of Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No. 421445 (Lonsec Research). Ratings are general advice only and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and SuperRatings assumes no obligation to update. SuperRatings uses objective criteria and receives a fee for publishing awards. Visit superratings.com.au for ratings information and to access the full report. © 2024 SuperRatings. All rights reserved.