Summary of key assumptions

We have commissioned SuperRatings to undertake the research and modelling for our advertisements. SuperRatings is a ratings and research company that specialises in analysing superannuation funds, their investment returns, their fees and the relative benefits they offer to their members.

Ten year performance difference model

 

Industry SuperFunds are the 16 Industry SuperFunds that participate in the marketing campaign. Retail funds are all retail funds that have appeared within the Balanced Option section of the SuperRatings Fund Crediting Rate Survey during this period. 

The Model:

 - Uses Balanced Options contained within the SuperRatings Fund Crediting Rate Survey for the period 30 June 2003 to 30 June 2012 (information on FCRS below) 

- Uses returns data that is submitted by funds to SuperRatings, made publicly available by funds or contained within formal fund disclosures

- Takes into account those fees that are deducted from investment returns before they are credited to members’ accounts

- Does not take into account fixed dollar member fees

- Calculates the average retail fund return for each 1 year period at 30 June, using balanced option returns for all retail funds with a 1 year return for that period

- Calculates the average Industry SuperFund return in each 1 year period at 30 June using data from the 16 participating Industry SuperFunds

- Subtracts the average retail fund return from the average Industry SuperFund return to find the annual return difference for each period

- Compounds the annual return differences between Industry SuperFunds and Master Trusts to arrive at the total return difference

- Uses 1 year returns of all retail funds included in the survey, including options that may have been terminated or entered the market during the ten year period

- Assumes no contributions or withdrawals over the 10 year period

- Will be updated yearly with 30 June figures, which are available in late July each year

SuperRatings Fund Crediting Rate Survey

The SuperRatings Fund Crediting Rate Survey was launched in June 2003. Produced monthly, it publishes investment returns for more than 100 funds across the Industry, Retail, Public & Corporate sectors.

 

Other campaign assumptions 

Life Expectancy

The statistics for this commercial are sourced from the Australian Bureau of Statistics 'Australian Historical Population Statistics 2008' report. Using this data we have derived an average for the Australian Population.  

Coverage
The statistics for this commercial are sourced from the Australian Bureau of Statistics Survey of Superannuation, February 1974 (ABS ref. no. 6.42) and Employment Arrangements, Retirement and Superannuation, Australia, April to July 2007 (Reissue) (ABS cat. no. 6361.0).

Retirement Dollars
The modelling for this commercial is based on the following assumptions: starting age 25, retirement age 65, starting salary $45,000, starting balance $15,000. This 40 year calculation uses a sample of 32 super funds (Industry SuperFunds and Retail Super Funds) to illustrate the value of super over a working life. Refer below for information on fees and all other assumptions.

The investment options included in the Retirement Dollars modelling are:

- AMP CustomSuper - AMP Balanced Growth
- AMP SuperLeader - SuperLeader Growth
- Aon Master Trust - Balanced Active
- AUST(Q) - Default Option
- ASGARD Employee Super - SMA Balanced
- AustralianSuper - Balanced Option
- AustSafe Super - Balanced
- AXA Super Directions Business - Multi-manager Balanced
- BT Lifetime Super Employer - BT Multi-manager Balanced
- CareSuper - Balanced
- Cbus - Growth
- Colonial FirstChoice Employer - FirstChoice Moderate
- Energy Super - Balanced 
- First Super - Balanced
- HESTA - Core Pool
- HOSTPLUS - Balanced 
- IOOF Portfolio Service Employer - IOOF MultiMix Balanced Growth Trust
- legalsuper - Growth
- LUCRF Super - Balanced 
- Media Super - Balanced
- Mercer Super Trust Corporate - Mercer Growth
- MLC MasterKey Business - Horizon 4 Balanced Portfolio
- MLC Navigator Employer Super - Pre Select Growth Fund  
- MTAA Super - Balanced
- NGS Super - Diversified  
- OnePath Corporate Super - Optimix Balanced 
- Optimum - Ibbotson Growth Trust
- REI Super - Trustee Super Balanced
- Spectrum Super - United Capital Growth Fund
- Suncorp WealthSmart Business - Suncorp Growth Portfolio
- TOWER ARC Corporate - TOWER Balanced Growth Fund
- TWUSUPER - Balanced

 

Key assumptions for modelling and calculations 

Salary increase
3.5% per annum.

Investment Returns
Fee Projection Modelling: Investment return of 6.825% per annum (gross of taxes and fees at 7.5%) including taxes of 9% deducted. Performance (Net Benefit) Modelling: Modelling is based on actual reported returns over the stated period.

When are investment returns credited to members’ accounts?
Annually.

Superannuation Guarantee Contribution
9% of Gross Salary. Assumes no salary sacrifice or voluntary contributions.

Contribution tax
15%

When are contributions assumed to be made?
Quarterly in arrears with 4th quarter contribution being received on the last day of the year.

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. Employer size FUM increases at 11.6% per annum.

Inflation
2.5% per annum

Average fees
All fees are those published in sample funds’ most recent product disclosure statements or other formal disclosures that are publicly available at the time of the calculation (30 September 2012). The reference to ‘Average fees’ in the advertisement refers to the average of chargeable administration, asset management and base investment management fees for the 32 funds listed above. Contribution fees, entry fees, exit fees, additional adviser fees or any other fees charged are excluded from this model.  

Insurance
No deductions made for insurance premiums.

Date of modelling
Performance and Fee Projection Modelling: 30 September 2012  

Key assumptions are in-line with modelling provided on the MoneySmart website provided by ASIC, with the exception of average fees and average returns.