Assumptions

Assumptions

SuperRatings is a ratings, research and consulting company that specialises in analysing superannuation funds, their investment returns, their fees and the relative benefits they offer to their members.

Background to the Accumulation Net Benefit Model, which is used by the Compare my super tool

The Compare my super tool, prepared by SuperRatings, calculates the variance in earnings and fees between funds. The sample set includes the CareSuper Balanced option and the main balanced options of funds that have comparable options which are actively tracked by SuperRatings, with a 3, 5, 7, 10 and 15 year performance history, including superannuation investment products that are open and those that are closed to new members but continue to hold assets.

Information about the model

  • The model uses the main balanced investment option (being the balanced investment option with the highest level of assets) offered by each product provider in the sample set and CareSuper’s Balanced option.
  • 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.
  • Using the starting account balance and salary, the contributions (based on the Superannuation Guarantee rate schedule), 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 historical fees for the comparison period.
  • 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 above the super guarantee or withdrawals over the relevant comparison period.

All amounts are shown in today’s dollars.

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.

Inflation
2.5% per annum.

Fees
All fee information is taken from the sample funds’ product disclosure statements or other formal disclosures. Contribution fees, entry fees, exit fees, additional adviser fees or any other fees charged are excluded from this model.

Insurance
No deductions are made for insurance fees.