Industry super funds: where is your money actually invested?

Where is your superannuation invested? I don’t mean with which provider or in which investment option, but in what assets? What investments are you exposed to? Chances are you probably don’t know, right?

A recent report – comparing the disclosure standards of all retirement savings systems in the world – claimed Australia’s superannuation system ranked second last overall with very poor levels of disclosure for members. Conversely, another recent report, which considered the effectiveness of world retirement systems, ranked superannuation second overall, an excellent result.

So what we essentially have is a world-class system lacking in disclosure.

Many of the disclosure criticisms relate to the investments held by industry super funds. Put simply, industry funds do not disclose what assets your money is invested in. You cannot ring up, look online or read in a Product Disclosure Statement (PDS) and find out what shares, properties, bonds etc you are exposed to.

The closest information you will find is the strategic asset allocation. This will show you what percentage of your money is exposed to each asset class, but not details on the investments within each asset class.

Importantly, more Australian’s have their retirement savings invested with industry fund providers than any other providers (such as retail master trusts and self managed super funds (SMSF’s)), so this issue is far-reaching.

Pressure is now mounting on industry super funds to improve their levels of disclosure. The Australian Securities & Investments Commission (ASIC) last year requested that industry funds develop standards for portfolio disclosure, and the Government has indicated that improved disclosure is a key part of their Stronger Super recommendations.

Industry funds haven’t resisted improving their disclosure standards but have warned there will be significant costs incurred. Time will tell whether these are passed on to members.