Barefoot’s report card on dud super funds

Scott Pape’s critique of Australia’s worst performing super funds reads like his Year 8 report card. And you should be worried if this is where you have your retirement savings.

Scott Pape at his property in Chitin, Victoria. Picture: David Geraghty

What you’re about to read is going to get me into trouble.

So I’m going to cut to the chase: to all the marketing managers of the products I’m about to mention, please email my assistant: [e-mail]

When I was a kid, I used to try and hide my school report from my parents, hoping they’d simply forget (this was in the days before email, and helicopter parenting).

Yet my plan was always foiled by my older sister, who was the dux of her class, and waited in anticipation all year for her brief bath in the parental sunshine.

Mole.

Well, the Government just released a (long, confusing, boring) report card - it’s called the APRA External Report (www.apra.gov.au) - on your super fund, and the worst super funds are hoping that you never read the report.

So let’s dig in.

OnePath was like my Year 8 report card: a total and utter sh … earing show (as my father would say). OnePath was singled out by the regulator for having no less than 33 dud super funds.

Thirty-three!

The worst super funds hope that you never read the government’s report card, called the APRA External Report.

OnePath was joined in veggie maths by BT Funds Management, Colonial First State, Auscol (Mine Super), Perpetual Super, MLC Super – whose report cards revealed “significantly poor performance”.

Some of the funds that were singled out for charging high admin fees include Verve Super (who market to women), Spaceship Super (who target millennials), Student Super (who need a detention), and the ironically named Cruelty Free Super (well, except for their barbaric admin fees).

And last but not least, Equity Trustees appear to be really struggling with their pencil grip, after being singled out by the regulator for both high fees and poor returns.

Am I being too harsh?

I don’t think so.

There is currently around $10 billion of our retirement savings sitting in underperforming funds. Many of them are not taking on new customers – because, well, who the hell would actively choose to join them?! However, they’re still more than happy to continue milking their existing customers with high fees and/or poor performance.

Why?

Because, unlike their customers, the people that run the funds are making seriously good profits!

Their only way of keeping this going is to hide their report card, and hope you forget to ask.

Don’t let them.

Tread Your Own Path!

So My Husband Has a Lady Friend

Hi Scott,

My husband has met a new lady friend. We got through Covid without killing each other (or the kids), but this year has been horrible. I’m totally stressed out that in November our home loan repayments will jump $1200 a month, and so I’ve been telling him we need to buckle down and stop spending. But he has no idea about money. In fact, just to tick me off, a few months ago he joined a very expensive gym which he flat-out refuses to drop. And today I’ve learned that he’s been messaging a woman there that he ‘trains’ with. I’m at boiling point, and I want him to leave. But what do I do then?

Natalie

If you decide a relationship is over, Barefoot suggests you change all your passwords and PINs.

Hi Natalie,

I am not a relationship counsellor.

However, I’ve helped enough people in your situation to know one thing for sure:

After the initial shock wears off, you’ll know in your gut whether it’s going to work out … or not. And if you decide it’s over, here is what you do next:

First, lock everything down.

Change all your passwords and PINs, and lock down your phone’s privacy and location tracking settings. Then find as much financial information as you can: you’re looking for copies of your marriage and birth certificates, and any information on shares, property or superannuation.

Second, call your bank’s hardship department. Let them know what’s going on (and if there’s been any family violence tell them that too). Ask them to put a freeze on all joint accounts, including credit cards. And, if you have a redraw or a line of credit on your home loan, have them change it so you both have to sign before making transactions. Then, open a new bank account in just your name that he can’t access.

Third, see a family lawyer. Actually, you should meet with a family lawyer even if you’re still sitting on the fence with the relationship. Reason being, the first meeting will be free, and you’ll be able to get answers to many of the questions that are swirling around in your head as you lie in bed at night.

Finally, whatever happens, make sure you reach out for support – it sounds like the next 12 months could be rough, and you don’t need to do it on your own.

The ‘Die with Debt’ Strategy

Dear Scott,

I feel a bit disturbed when a different strategy recently came to my attention. If you don’t have any children (or don’t plan to, which is becoming more common) and are therefore not worried about what you might pass on to your children when you die, then you should borrow as much money as you can and pay back as little as possible. Get a mortgage to buy a beautiful house, get loans to go on holidays, buy things that bring you joy, live it up a little. Just enjoy your life to the fullest without worrying about working too much. Just pay back a little to keep the lender off your back but don’t worry about how much you are borrowing, or how much interest it would add up to over the years … because you get the money, spend it, enjoy it and then you die with no one left to pay the debt. Win! Or is it?

Debbie

Dying with debt is not the best financial strategy, says Barefoot.

Hi Debbie,

This is the sort of ‘strategy’ that people come up with at the pub … after six schooners.

It is true that, if you die without enough to repay your debts, they’ll generally be forgiven. (Though not if the debt is in joint names – the lender will chase the surviving person.)

Sounds simple, right? It most certainly is not.

Can you imagine how stressful it would be to be old and financially stressed about keeping up your repayments? To be getting hassled by banks or debt collectors?

Besides, the vast majority of people want to leave a legacy, or at least square the ledger before they meet their maker.

My Ultimate Father’s Day Present

Scott,

Last year on Father’s Day you advised readers to sit down with their father and ask them five questions on video. My father was 75 and was over for dinner on Father’s Day so I did this and recorded his answers. Two months later he was diagnosed with stage four prostate cancer, and last week he passed away after a four-month battle. Tomorrow is his funeral and we will be playing this video. This footage is the last video of my father truly happy without the fear of a terminal cancer diagnosis. My family and I can not thank you enough for giving me the idea to ask my father these questions, and I strongly urge everyone to do the same as we truly cherish this video.

Nathan

Asking your dad five questions on video is the ‘ultimate Father’s day present’

Hi Nathan,

I’m really sorry for your loss.

However, I’m thankful you’ve given me the opportunity to give people a nudge to do what I call the ‘ultimate Father’s day present’.

If you’re lucky enough to have your father (or mother!) still with you, whip out your phone, hit ‘record’, and ask them the following questions:

How did you meet Mum?

What advice can you share with me about money, life and happiness?

What does being a dad mean to you?

What are you most proud of?

How would you like to be remembered?

There are a few things in life that cost nothing but are truly priceless. You now have one of them.

Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions

If you have a money question, email [e-mail]

Originally published as Barefoot’s report card on dud super funds