More than 95% of accounts held by retail super funds have not delivered above-median returns for their members over the past 10 years, according to a new report.
Industry Super Australia says analysis of 10-year Australia Prudential Regulation Authority (Apra) performance data shows retail super funds, owned by the major banks, have underperformed industry super funds by 1.9% per year on average over the past 10 years.
ISA has released a new paper, Performance Matters, detailing the extent of the difference in financial performance between the not-for-profit and for-profit super sectors.
It is the first of a series of papers ISA plans to release in coming weeks that tries to explain the reasons for the noticeable difference.
It comes two months after Industry Super started a new TV advertising campaign against the major bank-owned super funds, that warned workers about the banks' lobbying efforts in Canberra.
David Whiteley, the ISA chief executive, said his analysis of the Apra performance data was the clearest indication yet that profit orientation was a detriment to member outcomes.
"Constant outperformance by industry super funds over bank-owned super funds reflects the differences between for-profit and not-for-profit business models, which over the last two decades have seen significantly different member outcomes," he said.
"The fact is, running a super fund to profit a parent bank sits very uneasily with the interest of members and the social policy objectives of compulsory superannuation."
The ISA papers found 94% of all public offer bank-owned fund assets and 97% of their member accounts are held in funds that earned below median returns.
It also found 96% ($42.9bn) of cumulative fund-level investment returns above the median over the last decade were generated by the not-for-profit sector.
In contrast, the retail sector accounted for 96% ($25.4bn) of value lost relative to the median.
It shows three-quarters of all public offer bank-owned super fund assets are in funds with bottom quartile performance.
Conversely, three-quarters of all public offer industry super fund assets are in industry funds with top quartile performance and 91% are in industry funds with above median performance.
The Turnbull government wants to force all super funds – including not-for-profit default funds – to appoint an independent chair and fill a third of their board seats with independent directors, in a bid to make the industry more accountable and transparent.