The latest Class “SMSF Benchmark Report” has refuted the Productivity Commission’s claims that Australian Prudential Regulation Authority (APRA)-regulated funds are outperforming SMSFs, following a like-for-like comparison.
The statement was made in the commission’s draft report into assessing efficiency and competitiveness in superannuation, released in April.
However, the ATO’s return on assets (ROA) used for SMSFs and APRA’s rate of return (ROR) used for APRA funds not only produced misleading results, but also grossly underestimated SMSF returns, the Class report said.
A like-for-like comparison of super funds revealed the ROA formula produces an average 5.59 per cent return for SMSFs versus a 4.98 per cent return for APRA funds.
When applying the ROR formula, the returns improve for all funds, with an average 6.71 per cent return for SMSFs versus a 5.58 per cent return for APRA funds.
Interestingly, the ROR 6.71 per cent average return for SMSFs outperforms the Productivity Commission benchmarks for both listed, and listed plus unlisted assets.
For the 10-year period the commission’s report covers, on average SMSFs outperformed APRA funds on a like-for-like basis regardless of whether ROA or ROR is used.
“The competing approaches used to report super performance deliver significant differences and given the dual regulators are responsible for an industry worth over $2.5 trillion, it’s time for APRA and the ATO to agree on a consistent approach to fund performance reporting,” Class chief executive Kevin Bungard said.