Assumptions

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:

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.

5 year outcomes

 10 year outcomes

15 year outcomes

As at 30 June 2024
Executive ladies ‘Compare The Pair’ – This assumption set is utilised in the advertisement depicting two women rock climbing.
Middle income met ‘Compare The Pair’ – This assumption set is utilised in the advertisement depicting two men at the barbers. 

ISA Pty Ltd (ISA) has commissioned SuperRatings Pty Ltd (SuperRatings) to undertake research and modelling for us. 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. 

Unlike our Accumulation Net Benefit model (above), which looks at the accumulation in an individual's benefit during a member's contributory phase of their superannuation, the Pension Net Benefit model focuses on the drawdown phase of a member in retirement. This Pension Net Benefit Model is based on SuperRatings’ analysis of investment returns, fees and the relative benefits offered to members during the pension phase. Analysing the variance in earnings and fees between Industry SuperFund pension products and a sample set of retail pension products, the model calculates the de-cumulation of a member's benefit within the pension phase over a 5-year period to 30 June 2024.

For example, the 5-year timeframe tracks the de-cumulation of a member's benefit utilising each of the tracked funds’ pension product between ages 67-71, commencing from 1 July 2019 and finishing on 30 June 2024.

Sample Set

The sample set used in the 5-year modelling contains the 7 Industry SuperFunds that participate in the ISA marketing campaign.

As at 30 June 2024, the number of retail super options included in the sample set as at each year:

Information about the Pension Net Benefit Model

• The model uses the ‘main Balanced option’, being the fund’s largest  Pension 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 pension 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, drawdowns, 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 from the previous year is then used to calculate monthly drawdowns, earnings and fees on the account in the following years. That process is 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. We refer to this as the RMT sample set.
• The model assumes no additional withdrawals over the relevant comparison period.
• The model will be updated annually with 30 June figures (available in approximately October each year).

Other Assumptions used for the Pension Net Benefit Model

Opening account balance

Each calculation timeframe assumes an opening account balance.

Investment Returns

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

When are investment returns credited to members' accounts?

Investment returns are credited annually, however, the total investment return is adjusted to take into account monthly pension payments and fee deductions.

Pension drawdowns

Pension drawdowns are calculated utilising a drawdown level of 5% per annum (which is aligned with the minimum legislated drawdown level for a member aged 65 at the commencement of the pension) and are assumed to occur monthly.

When are fees assumed to be deducted?

Annually.

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. Establishment fees, buy/sell spreads, entry fees, exit fees, additional adviser fees or any other fees charged are excluded from this model.

Insurance

No deductions are made for insurance premiums.

5 year outcomes

The account balance is calculated by taking returns over the comparator period (5 years) less drawdowns and fees.

Modelling was performed on 6 October 2023 using data as at 30 June 2023.