Product Dashboards and Disclosure

Transcription

1 8 November 2016 Louise Lilley, (Acting Manager) Insurance and Superannuation Unit Financial System and Services Division The Treasury Langton Crescent Parkes ACT Jenny Wilkinson, Division Head Retirement Income Policy Division The Treasury Langton Crescent Parkes ACT Dear Louise and Jenny, Product Dashboards and Disclosure As you are aware, the Actuaries Institute is very interested in effective consumer disclosure. We have been concerned for some time about the effectiveness of the current superannuation disclosure regime and have prepared many submissions that set out our concerns. The Institute believes that it is important that superannuation fund members become aware of the deficiencies in the current MySuper Product Dashboards (and the planned Choice Product Dashboards). We have therefore issued the Media Release in Attachment 1 which summarises our concerns. The key changes referred to in the media release are: 1. Net Investment Return to replace APRA S Net Return reported on the dashboard. 2. Return Target as defined by APRA to be replaced by the Trustee s SIS Investment Return Objective (but see the suggestions on the last page of this submission). 3. A long risk measure introduced and all risk labels removed. 4. A breakdown table of fees and costs for three example members with account balances of $10,000, $50,000 and $250,000 respectively. 5. Indirect costs to be split between investment and administration/advice and then aggregated with investment fees and administration/advice fees respectively (with the terminology other costs to replace Indirect Cost Ratios and ICR s ). 6. Remove the return target line from the chart and add a table with a more direct and easily understood measure of investment performance against objective. These six changes are illustrated in the two examples enclosed with Attachment 2. Institute of Actuaries of Australia ABN Level 2, 50 Carrington Street, Sydney NSW Australia 2000 t +61 (0) f +61 (0) e actuaries@actuaries.asn.au w

2 The Actuaries Institute believes that these two simplified examples demonstrate how it is possible for the Government to: Replace the current dashboard with a logical and sound alternative which will help members to choose products that will maximise their retirement benefits Remove the need for trustees to determine a target which is causing confusion by adding complex inconsistencies between dashboards and PDS s Avoid increases in costs due to duplication in regulatory requirements Have the same form of dashboard for both MySuper and Choice products Enable consumers to compare the investment performance of different products Discard misunderstood risk labels Recognise that most superannuation members have long not short term objectives Provide fees and cost examples which disclose dollar and asset-based impacts Cease total fees only disclosure and resultant market distortion Rectify the dashboard chart which has failed ASIC consumer-testing Add a colour-coded table which clearly compares returns against objectives Simplify fees and returns by removing unnecessary and confusing jargon. Disclosure of Indirect Costs Attachment 2 is a copy of our submission of 1 st March 2016 Indirect Costs & Product Dashboards. It explains that for over 15 years the SIS and Corporations Regulations fee and cost reporting and disclosure requirements have focused on, and continue to focus on: (1) The separation of direct fees from indirect costs, and more recently from indirect fees, rather than (2) The separation of investment fees and costs from administration/advice fees and costs. Draft Regulations governing MySuper and Choice Dashboards show the split between investment fees and administration/advice fees but do not separate the investment and administration/advice components of indirect costs. They also mix percentages and dollars in one table which would be very confusing to members. The Institute is seeking a change from (1) to (2) for current and proposed superannuation product dashboards and for Product Disclosure Statements (PDS s), Periodic Statements and for Fund APRA Reporting. The Actuaries Institute strongly recommends that indirect costs should be: (a) split between investment and administration/advice, (b) combined respectively with investment fees and administration/advice fees, and (c) referred to as other costs or costs (as has been the situation for some years). The reasons for this recommendation are set out on pages 2 and 3 of Attachment 2. Page 2 of 8

3 This recommendation was discussed at APRA, ASIC, Treasury and industry Roundtable meetings in Melbourne and Sydney in mid-january 2016 and was favourably received. The recommendation was made on the premise that indirect costs exclude transaction costs (though these could be disclosed in PDS Additional Information). In a subsequent letter to APRA we have recommended that this change for superannuation dashboards is equally desirable for Product Disclosure Statements, Periodic Statements and for Fund APRA Reporting. Fees and Costs Disclosure The Institute has recently analysed the fees and costs disclosed on Product Dashboards for the largest 20 MySuper products by fund assets at 30 June These numbers vary slightly from more recent APRA statistics but our conclusions are independent of the actual numbers. The results of the research are set out in Attachment 3. This research supports our view that only disclosing the total fees and costs for a member with a $50,000 superannuation balance does not properly enable a member to achieve the objectives set out in the Explanatory Memorandum of the Tranche 3 Act, viz The product dashboard is intended to provide key information about MySuper products, which is useful for both new and existing members, and for this information to be presented in a standardised manner to allow consumers to easily compare products and make informed choices. As indicated in our Media Release, we believe that total (dollar-based) administration/advice fees and costs (including indirect costs) must be shown separately from total (dollar-based) investment fees and costs (including indirect costs) for members with a range of account balances to achieve each element of these objectives. The use of short dollar-based tables appears to be supported by ASIC s consumer testing of product dashboards. One of the findings in ASIC s Report 455 was that While many participants found the fees and other costs easy to locate in the Dashboard design, some found it difficult to determine if the fees were fair and reasonable due to the example using a fund balance of $50,000. Many participants welcomed the inclusion of a dollar value... Page 3 of 8

4 Tables 1 and 2 below, based on data taken from Attachment 3, demonstrates why the objectives set out in the Explanatory Memorandum are not satisfied by the current dashboard. Table 1 - Comparison of total fees and costs Fund Admin fees and costs Investment fees and costs $ % % Total fees and costs for a balance of $50,000 ANZ SmartChoice $305 UniSuper Accum $326 AustralianSuper $377 Sunsuper $378 First State Super $384 QSuper $385 REST $437 MTAA Super $446 CBUS $457 HESTA $480 VicSuper $521 HOSTPLUS $552 CFS FirstChoice Employer $560 Telstra Super $561 BT Super for Life $595 Plum Super Personal $620 MLC Business Super $623 CareSuper $633 Mercer SmartSuper $675 AMP SS Select $726 Consider, for example, the total fees and costs for a member with a balance of $50,000 for HOSTPLUS ($552) and QSuper ($385). Consideration only of these numbers could lead a HOSTPLUS member to move to QSuper. Table 1 would also suggest that CFS FirstChoice Employer and HOSTPLUS are equally attractive. However, if we consider the administration fees and costs in isolation the position is entirely different. Page 4 of 8

5 Table 2 below sets out the administration fees and costs for the funds. Table 2 Comparison of administration fees and costs Fund Admin fees and costs Admin fees and costs for a balance of $ % $10,000 $50,000 $250,000 ANZ SmartChoice $51 $55 $75 AustralianSuper $92 $92 $92 HOSTPLUS $92 $92 $92 UniSuper Accum $96 $96 $96 QSuper $20 $100 $500 HESTA $73 $105 $265 REST $67 $107 $307 Sunsuper $88 $128 $328 CBUS $102 $142 $342 First State Super $79 $149 $502 CareSuper $97 $173 $553 MTAA Super $115 $186 $538 Telstra Super $118 $221 $739 Vicsuper $125 $256 $915 Plum Super Personal $127 $275 $1,015 MLC Business Super $118 $278 $1,078 BT Super for Life $115 $335 $1,435 CFS FirstChoice Employer $120 $360 $1,560 Mercer SmartSuper $139 $375 $1,555 AMP SS Select $154 $426 $1,786 It can be seen from this comparison, that HOSTPLUS has one of the lowest administration fees for a member with a $50,000 balance and it is lower than the comparable administration fee for QSuper. The reason why HOSTPLUS has higher total fees and costs is that the investment fees and costs for HOSTPLUS (0.92%) are much higher than those of QSuper (0.57%). There can be many reasons why the investment fees and costs of one fund are higher than another. These can range from the higher cost fund having less scale or simply using more expensive managers to making greater use of active managers or having a different investment mix with greater allocation to asset classes that have higher costs but are expected to provide investment returns that are higher or less volatile or both. However, if we consider CFS FirstChoice Employer, the administration fees and costs for a member with a $50,000 balance ($360) are substantially higher than those of HOSTPLUS ($92). A member choosing between these two funds would have to decide whether HOSTPLUS (i) offers superior member services that justify the extra costs and/or (ii) would generate the higher returns needed to offset these higher administration fees and costs. Page 5 of 8

6 The important point is that a member cannot make such a decision based on the total fees and costs charged by each fund. The dashboard must disclose the dollar cost of both administration and investment separately to alert a member that further investigation may be necessary before they can choose a fund. Otherwise a member might make an inappropriate decision that could lead to significant financial loss. Table 2 also demonstrates why the figures for more than one account balance are necessary. For a member whose account balance is $10,000 QSuper s administration fees and costs are only $20. This is lower than the comparable HOSTPLUS fees and costs of $92. Therefore, for a member with a low balance (or for a new entrant with no initial balance) who wants to minimise short-term fees and costs, QSuper may be more attractive even though comparing the administration fees and costs for a member with a $50,000 balance would suggest that this is not the case. For a member whose account balance is $250,000, HOSTPLUS charges much lower administration fees and costs. However, the investment fees and costs for HOSTPLUS are much higher. Therefore, the added value that these higher fees and costs generate (if any) is very important, particularly for such a large account balance. For a particular member, the likely growth in fees and costs over time can only be truly gauged by considering a projection, nevertheless a well-designed dashboard (such as that in Attachment 2) can indicate that sometimes further information may be necessary. The prime reason for this is that different fee types can grow at VERY different rates. We also believe that, as many members may rely on the dashboard metrics to choose a fund, that the warning like that which must be included in PDS s i.e. Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns. For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return [ benefit would be a more appropriate word] by up to 20% over a 30 year period (for example reduce it from $ to $80 000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. should be added to dashboards. Our analysis also reinforces our view that the dashboard should disclose investment returns net of tax and only investment fees and costs as members will have to investigate the actual investment returns they expect to receive to determine whether higher investment fees and costs are warranted. Any member who investigates the investment returns achieved by a fund disclosed in any other fund documents will be confused as these documents will show the net Investment return (ie gross returns less investment tax and fees and costs) and not the Net Return disclosed on the dashboard. For clarity, we note we would not support addressing this potential confusion via the application of SIS s29qc to require the Net Return calculation methodology to be used for all return disclosures. Page 6 of 8

7 Further confusion will occur when a member compares the Return Target disclosed on the dashboard with the Investment Objective set by the Trustee for the product. This objective may be completely different to the Return Target disclosed on the dashboard (particularly for Choice funds). The Legislation and Regulations The various changes we propose are significant but essential for consumers informed decision making. Our understanding is that most of the legislation regarding fees and returns is general and broad enough, by design, to let the regulations determine exactly how it would be interpreted. Hence, as far as possible, we are not seeking changes to legislation, but are seeking changes to Treasury s and APRA s interpretations of government policy on how the legislation should be interpreted. One exception to the foregoing may be our proposals regarding return targets and investment objectives. We recognise that the latter are often not created on a consistent basis and the legislation does not give APRA the power to force consistency on trustees. We would like to discuss this matter further with ASIC or APRA to find a workable way to minimise duplication for trustees and, more importantly, to avoid the confusion for consumers who either disregard the return targets or are in danger of misinterpreting them because of their many subtle differences from investment objectives. Long Term Risk Measure On 31 October 2016 the Actuaries Institute forwarded a letter to representatives of various industry bodies with proposed objectives, definitions and details for a long term risk measure to supplement the current short term (or standard ) risk measure. We look forward to developing these proposals further with all stakeholders. Other Actions We are currently in the process of organising one-on-one discussions, and if required joint discussions, with the recipients of this open letter. Some organisations have already been contacted and we intend to contact others later this month. Please do not hesitate to contact myself or the Chief Executive Officer of the Actuaries Institute, David Bell (phone or david.bell@actuaries.asn.au) to discuss any aspect of this letter. Yours sincerely, Andrew Boal, Convenor Superannuation Practice Committee Page 7 of 8

8 Cc Helen Rowell APRA Deputy Chair Australian Prudential Regulation Authority Ged Fitzpatrick Senior Executive Leader, Investment Managers and Superannuation Australian Securities & Investments Commission Tom Garcia Chief Executive Officer Australian Institute of Superannuation Trustees Martin Fahy Chief Executive Officer Association of Superannuation Funds of Australia David Whiteley Chief Executive Industry Super Australia Susan Thorp Super Consumers Centre Consumers Federation of Australia Sally Loane Chief Executive Officer Financial Services Council Karen Chester Deputy Chair Productivity Commission Locked Bag 2, Collins Street East Melbourne, Vic 8003 Page 8 of 8

9 Actuaries Institute urges overhaul of superannuation dashboards 15 August 2016 The Actuaries Institute today urged policymakers to overhaul superannuation dashboards to provide consumers with more meaningful and transparent information about the risks, returns and costs of their funds so they can make better informed decisions about their choice of superannuation fund and investment option that affect their retirement savings. Dashboards were originally mandated by Government to help consumers compare superannuation fund performance in terms of investment risk and return, as well as the fees and costs associated with running the fund. However, the Institute believes that the current dashboards are technically unsound and need to be amended. In a climate where consumers need more transparency from financial services providers, our concern is that consumers are making decisions affecting their financial future based on information that may not be meaningful to their needs. The current dashboards provide limited help to consumers and, in some instances, may even mislead them into making decisions that will ultimately reduce their retirement benefits, said, Andrew Boal, Convenor of the Institute s Superannuation Practice Committee. Our position is based on a careful review of the current MySuper dashboard structure and we hope that regulators will take notice of our concerns. In particular, the separation of investment fees and costs from administration/advice fees and costs is critical to member understanding of the value they receive from their superannuation fund. Including examples based on several different sized account balances is also important to help members understand the different impact on their retirement savings of dollar based versus asset based fees and costs. It is also extremely important that policymakers shift the current focus on the dashboards away from solely short-term investment risks to include a longer term investment risk measure which is far more important to most members, Mr Boal added. Examples of where dashboards could be overhauled include: Use the same form of dashboard for both MySuper and Choice products. Replace misunderstood risk labels and introduce a long term investment risk measure. Provide a sounder basis for consumers to compare the investment performance of different products. Stop using disclosures based only on total fees and instead separate investment fees and costs from administration/advice fees and costs. Provide examples which disclose the impact of both dollar based and asset based fees and costs. Simplify the description of fees and returns by removing unnecessary and confusing jargon. Media Contacts Ian Pemberton P&L Corporate Communications m Matthew Russell P&L Corporate Communications m Page 1 of 2 Institute of Actuaries of Australia Level 2, 50 Carrington Street SYDNEY NSW 2000 t +61 (0) f +61 (0) actuaries@actuaries.asn.au І

10 About the Actuaries Institute As the sole professional body for Members in Australia and overseas, the Actuaries Institute represents the interests of the profession to government, business and the community. Actuaries assess risks through long-term analyses, modelling and scenario planning across a wide range of business problems. This unrivalled expertise enables the profession to comment on a range of business-related issues including enterprise risk management and prudential regulation, retirement income policy, finance and investment, general insurance, life insurance and health financing. Page 2 of 2 Institute of Actuaries of Australia Level 2, 50 Carrington Street SYDNEY NSW 2000 t +61 (0) f +61 (0) actuaries@actuaries.asn.au І

11 1 March 2016 Louise Lilley (Acting Manager) Insurance and Superannuation Unit Financial System and Services Division The Treasury Langton Crescent Parkes ACT 2600 Jenny Wilkinson Division Head Retirement Income Policy Division The Treasury Langton Crescent Parkes ACT Dear Louise and Jenny, Indirect Costs and Product Dashboards The purpose of this letter is twofold. Firstly we wish to clarify and explain our views about superannuation fund Indirect costs, and secondly we have attached revised versions of the two example dashboards that we produced late last year. Indirect Costs We refer to our previous submissions of 18 August 2015, 8 October 2015, 11 December 2015 and 17 December 2015 relating to Product Dashboards. Page 2 of our 18 August 2015 letter listed the eight main changes we are seeking for Product Dashboards. One of the recommendations was: Provide a table of fees and costs showing how these are split between administration, advice and investment. The reason for this proposal was set out in our February 2014 submission, and relates to the fact that Investment fees need to be assessed separately by members against the return they might expect based on the fund s specific investment strategy. The exposure draft regulations issued in December 2015 included a revision to subregulation N(2) that proposed a Statement of fees and other costs showing: Investment fees [ ] % of $50,000 PLUS administration $[ ] and advice fees PLUS indirect costs [ ] % of $50,000 Institute of Actuaries of Australia ABN Level 2, 50 Carrington Street, Sydney NSW Australia 2000 t +61 (0) f +61 (0) e actuaries@actuaries.asn.au w

12 Although this presentation shows the split between investment fees and administration/advice fees it does not separate the investment and administration/advice components of indirect costs. It also mixes percentages and dollars in one table which would be very confusing to members. At the Industry Roundtable discussions held in Melbourne and Sydney in mid January 2016, representatives of the Actuaries Institute explained that indirect costs should be: (a) split between investment and administration/advice, (b) combined with investment fees and administration/advice fees, and (c) referred to as other costs in headings (as has been the situation for some years). At both meetings these proposals appeared to be well accepted by ASIC and APRA representatives and by the other stakeholders. For the following reasons we believe that these changes are important: (1) investment services are paid for by both investment fees and investment costs and cover the costs of investing members funds to provide an appropriate return on their investments, (2) administration/advice services are paid for by administration fees, administration costs and advice fees and cover very different services from (1) above, for example, the costs of contribution and benefit processing, member records and a wide range of member services such as education, targeted campaigns, scaled advice and a fund s online services, (3) administration/advice fees and costs (and the services they provide) should be compared separately from investment fees and costs (and the services they provide) - where either measure of fees and costs is significantly different from other funds, the member will be alerted to investigate the reason for these differences. (4) the separation of investment and administration/advice fees and costs is far more important than the separation of fees from indirect costs - many consumers will be unnecessarily confused if the superannuation industry retains the past focus on operational/mechanical differences between fees and costs. (5) the main problem with the past strong distinction between fees and costs, is that different funds treat fees and costs quite differently and the separation implies a false level of accuracy - very similar costs (and even very similar deduction of those costs from members accounts) are variously treated as fees and/or costs by different funds. (6) the main difference between a fee and cost is that the fee is known in advance whereas a cost is usually known after the period and is based on cost recovery these subtleties are of little or no interest to members and should usually not enter into comparisons between funds, products or services. (7) the statement of fees and other costs must be as kept as simple as possible - unnecessary and confusing jargon (such as indirect costs, indirect cost ratios and ICR costs ) should be removed - but we recommend that the two words other costs should be retained in headings to make it clear that they are included. (8) separately showing both fees and costs for investment and administration/ advice would result in too many numbers and Dashboards would become unworkable for members. (9) there should be no double counting fees and other costs should only be counted once other costs should comprise any impost which impacts on a member s benefits which is not a fee, tax, or insurance premium. Page 2 of 3

13 The main purpose of the Dashboard is to allow members to compare funds and the different practices of what is shown as a fee and what is shown as a cost should not be allowed to confuse members as they try to compare funds. For such a purpose, we believe the fees and costs for administration/advice and the fees and costs for investment are what members need to compare between funds, products and services. Product Dashboards The updated copies of the two example Dashboards we enclosed with our submission of 17 December 2015 included a Statement of fees and other costs based on account balances of $10,000 and $50,000. These also combined Administration and Advice in the fees and costs table consistent with the Superannuation Transparency proposals. This was a useful simplification. It results in a fee and cost table containing just three lines (i.e. Administration and Advice, Investment and Total ) for each balance. At the Industry Roundtable discussions held in mid January 2016, it was suggested that the fee and cost table could usefully be expanded by adding fees and costs for an account balance of $250,000. We believe that this idea has merit because it shows the full impact of fees and costs over a much wider range of account balances. Because of the removal of the Indirect cost line (based on our recommendations) and the combining of Administration and Advice, it can also now be achieved without over-complicating the table. We have therefore updated our two example Dashboards to include a Statement of fees and other costs based on account balances of $10,000, $50,000 and $250,000. The revised examples are enclosed for your consideration. We are currently exploring ways of replacing the three-by-two Investment Risk table on each example with two graphics one for illustrating short-term investment risk and the other for illustrating long-term investment risk. Replacing the table with two graphics improves the visual presentation and we believe it will help improve consumer understanding of the two investment risks. We are currently developing this and will forward it to you as soon as possible. Please do not hesitate to contact myself or the Chief Executive Officer of the Actuaries Institute, David Bell (phone or david.bell@actuaries.asn.au) to discuss any aspect of this letter. Yours sincerely, Andrew Boal Convenor, Superannuation Practice Committee cc Maan Beydoun Senior Specialist, Investment Managers and Superannuation, ASIC maan.beydoun@asic.gov.au Helen Rowell APRA Deputy Chair, APRA hrowell@apra.gov.au Pauline Vamos Chief Executive Officer, ASFA pvamos@superannuation.asn.au Page 3 of 3

14 ABC Super Dashboard MySuper Australian Shares Option An explanation of the terms used in the Dashboard can be found at this link, Explanation of Terms. Investment Return (Average for 10 years to 30 June 2015) Investment Return Objective Actual Investment Return S&P/ASX 300 Accumulation Index (Adjusted for tax) S&P/ASX 300 Accumulation Index (Adjusted for tax) + 0.7% 6.9% pa 7.6% pa Investment Risk Short-term volatility Long-term growth Chance of a negative investment return in any given year Chance of investment return lower than CPI + 4% pa over 20 years 6 in 20 3 in 20 Statement of fees and other costs (per annum) $10,000 account balance $50,000 account balance $250,000 account balance Administration and Advice $98 $178 $578 Investment $31 $155 $775 Total $129 $333 $1,353 Average Investment Returns compared with Objective (% per annum) Investment Return Objective for 10 years to 30 June (% pa) 10 year average Investment Return to 30 June (% pa) Investment Returns over the last 10 years (% per annum)

15 Explanation of terms Investment Return The Investment Return is the net investment return achieved over a period after investment taxes and investment fees and costs. The Investment Return Objective is the objective that the Trustee of the Fund has set for the Australian Shares Option over the medium to long term. The investments held by the Trustee are selected to achieve this objective. Future returns are not guaranteed, so this is only an objective and therefore may not be achieved. The S&P/ASX 300 Accumulation Index (Adjusted for Tax) is a benchmark that measures the investment return that an investment in the shares of the top largest 300 Australian companies (weighted by the market value of all the shares in each company) would have achieved allowing for the dividends that are paid by these companies and the tax that a superannuation fund would pay. The Actual Investment Return is the actual compound average Investment Return achieved over the 10 year period to 30 June Investment Risk Short-term volatility indicates how likely it is that the value of your investments will fall over any given year. Long-term growth indicates how likely it is that your investments will not grow sufficiently faster than CPI over the longer term, which could mean you won t have enough income in retirement. The 4% margin over CPI is a standard margin set for all Australian superannuation funds to measure the long-term growth investment risk. CPI is the Consumer Price Index, reported by the Australian Bureau of Statistics. Statement of fees and other costs (per annum) The fees and costs on the Dashboard assume that the member is fully invested in the Australian Shares Option. Administration ABC Super charges a flat fee of $1.50 each week. The fee is charged directly to a member s account. Further administration costs have been deducted from investment earnings. For the year ending 30 June 2015 this cost was 0.2% of the value of fund assets. Advice There is no charge for general advice that is provided to members. Advice that takes into account your personal circumstances is negotiated between you and your adviser. This can include advice on your investment options, insurance cover, contributions to super and retirement pension options and can be deducted from your super account or paid directly to your adviser. The cost of advice on non-super matters can t be deducted from your account. Investment The investment fees and costs for the Australian Shares Option were 0.31% for 2014/15. This includes investment management, custodian and asset consultant fees, including performance fees. The amount quoted in the Dashboard is calculated looking back at 30 June each year (using the average value of all assets in the investment option over the year to 30 June). These may change from year to year. For the last three years performance fees have been 0.01% (2012/13), 0.00% (2013/14) and 0.01% (2014/15) of the value of assets for the Australian Shares Option. The 2014/15 fee has been included in the investment fees and costs shown on the Dashboard. Average Investment Returns Compared with Objective (% per annum) The Investment Return Objective for 10 years to 30 June (% pa) is the compound average Investment Return Objective over 10 year periods to 30 June each year. The 10 year average Investment Return to 30 June (% pa) is the compound average Investment Return actually achieved over 10 year periods to 30 June each year. It is useful to compare the actual average investment return achieved over 10 year periods with the average Investment Return Objective for the same period. This will provide a guide as to how well a fund is progressing towards satisfying its Investment Return Objective. Green shading indicates that this guide to the objective was met. Investment Returns over the last 10 years (% per annum) The 1 year return is the Investment Return for each year to 30 June for each of the last 10 years for the Australian Shares Option. The 10 year average return is the compound average Investment Return actually achieved over 10 year periods to 30 June each year.

16 ABC Super Dashboard MySuper Balanced Option (MySuper) An explanation of the terms used in the Dashboard can be found at this link, Explanation of Terms. Investment Return (Average for 10 years to 30 June 2015) Investment Return Objective CPI + 4% pa 6.6% pa Actual Investment Return CPI + 4.7% pa 7.3% pa Investment Risk Short-term volatility Long-term growth Chance of a negative investment return in any given year Chance of investment return lower than CPI + 4% pa over 20 years 4 in 20 5 in 20 Statement of fees and other costs (per annum) $10,000 account balance $50,000 account balance $250,000 account balance Administration and Advice $98 $178 $578 Investment $57 $285 $1,425 Total $155 $463 $2,003 Average Investment Returns compared with Objective (% per annum) Investment Return Objective for 10 years to 30 June (% pa) 10 year average Investment Return to 30 June (% pa) Investment Returns over the last 10 years (% per annum)

17 Explanation of terms Investment Return The Investment Return is the net investment return achieved over a period after investment taxes and investment fees and costs. The Investment Return Objective is the objective that the Trustee of the Fund has set for the MySuper option over the medium to long term. The investments held by the Trustee are selected to achieve this objective. Future returns are not guaranteed, so this is only an objective and therefore may not be achieved. The Actual Investment Return is the actual compound average Investment Return achieved over the 10 year period to 30 June CPI is the Consumer Price Index, reported by the Australian Bureau of Statistics. Investment Risk Short-term volatility indicates how likely it is that the value of your investments will fall over any given year. Long-term growth indicates how likely it is that your investments will not grow sufficiently faster than CPI over the longer term, which could mean you won t have enough income in retirement. The 4% margin over CPI is a standard margin set for all Australian superannuation funds to measure the long-term growth investment risk. CPI is the Consumer Price Index, reported by the Australian Bureau of Statistics. Statement of fees and other costs (per annum) The fees and costs on the Dashboard assume that the member is fully invested in the MySuper Option. Administration ABC Super charges a flat fee of $1.50 each week. The fee is charged directly to a member s account. Further administration costs have been deducted from investment earnings. For the year ending 30 June 2014 this cost was 0.2% of the value of fund assets. Advice There is no charge for general advice that is provided to members. Advice that takes into account your personal circumstances is negotiated between you and your adviser. This can include advice on your investment options, insurance cover, contributions to super and retirement pension options and can be deducted from your super account or paid directly to your adviser. The cost of advice on non-super matters can t be deducted from your account. Investment The investment fees and costs for the MySuper Option were 0.57% for 2014/15. This includes investment management, custodian and asset consultant fees, including performance fees. The amount quoted in the Dashboard is calculated looking back at 30 June each year (using the average value of all assets in the investment option over the year to 30 June). These may change from year to year. For the last three years performance fees have been 0.13% (2012/13), 0.07% (2013/14) and 0.05% (2014/15) of the value of assets for the MySuper option. The 2014/15 fee has been included in the investment fees and costs shown on the Dashboard. Average Investment Returns Compared with Objective (% per annum) The Investment Return Objective for 10 years to 30 June (% pa) is the compound average Investment Return Objective over 10 year periods to 30 June each year. The 10 year average Investment Return to 30 June (% pa) is the compound average Investment Return actually achieved over 10 year periods to 30 June each year. It is useful to compare the actual average investment return achieved over 10 year periods with the average Investment Return Objective for the same period. This will provide a guide as to how well a fund is progressing towards satisfying its Investment Return Objective. Green shading indicates that this guide to the objective was met. Investment Returns over the last 10 years (% per annum) The 1 year return is the Investment Return for each year to 30 June for each of the last 10 years for the MySuper option. The 10 year average return is the compound average Investment Return actually achieved over 10 year periods to 30 June each year.

18 Attachment 3 - Analysis The Actuaries Institute sent the following information to the Productivity Commission in a submission dated 10 June 2016:... the Actuaries Institute believes that the only fees and costs which should be hypothecated to returns are investment fees and costs. Administration fees and costs are often expressed as both a dollar per member and a percentage of fund balances. The following analysis of the largest 20 MySuper products (by Fund assets) at 30 June 2015, shows that the product with the lowest administration fees and costs is: For members with account balances of $20,000 or less: QSuper For members with account balances of $50,000 to $200,000: ANZ SmartChoice For members with account balances of $500,000 to $2,000,000: AustralianSuper This clearly shows that the product with the lowest fees for one member will not necessarily be the product with the lowest fees for other members. We have changed the $200,000 column to $250,000 and re-ordered funds based on results for a $50,000 account balance. 1 Fund MySuper Member Admin ANNUAL ADMINISTRATION FEES AND COSTS * Fund Size Fee Fee & cost Account balance $b $ % $500 $1,000 $2,000 $5,000 $10,000 $20,000 $50,000 $100,000 $250,000 $500,000 $1,000,000 $2,000,000 ANZ SmartChoice $50 $50 $50 $51 $51 $52 $55 $60 $75 $100 $150 $250 AustralianSuper $92 $92 $92 $92 $92 $92 $92 $92 $92 $92 $92 $92 HOSTPLUS (administration fees and costs are the same as for AustralianSuper) UniSuper Accum $96 $96 $96 $96 $96 $96 $96 $96 $96 $96 $96 $96 HESTA $65 $66 $67 $69 $73 $81 $105 $145 $265 $465 $865 $1,665 REST $58 $58 $59 $62 $67 $77 $107 $157 $307 $557 $1,057 $2,057 Sunsuper $79 $79 $80 $83 $88 $98 $128 $178 $328 $578 $1,078 $2,078 CBUS $92 $93 $94 $97 $102 $112 $142 $192 $342 $592 $1,092 $2,092 QSuper $1 $2 $4 $10 $20 $40 $100 $200 $500 $1,000 $1,000 $1,000 First State Super $62 $63 $65 $70 $79 $96 $149 $238 $502 $944 $1,826 $3,591 MTAA Super $99 $100 $101 $107 $115 $133 $186 $274 $538 $978 $1,858 $3,618 CareSuper $79 $80 $82 $88 $97 $116 $173 $268 $553 $1,028 $1,978 $3,878 Telstra Super $93 $94 $97 $105 $118 $144 $221 $351 $739 $1,386 $2,680 $5,268 Vicsuper $93 $95 $98 $108 $125 $158 $256 $421 $915 $1,739 $3,386 $6,680 Plum Super Personal $92 $94 $97 $109 $127 $164 $275 $460 $1,015 $1,940 $3,790 $7,490 MLC Business Super $80 $82 $86 $98 $118 $158 $278 $478 $1,078 $2,078 $4,078 $8,078 BT Super for Life $63 $66 $71 $88 $115 $170 $335 $610 $1,435 $2,810 $5,560 $11,060 Mercer SmartSuper $83 $86 $92 $109 $139 $198 $375 $670 $1,555 $3,030 $5,980 $11,880 CFS FirstChoice E'er $63 $66 $72 $90 $120 $180 $360 $660 $1,560 $3,060 $6,060 $12,060 AMP SS Select $90 $93 $100 $120 $154 $222 $426 $766 $1,786 $3,486 $6,886 $13,686 Includes: APRA levies or expense allowances. Capped at $1000 per year. * Excludes: ORFR levies where identified. Source: Chant West Pty Limited fees & costs at 30 June 2015 Lowest fees 1 $1 $2 $4 $10 $20 $40 $55 $60 $75 $92 $92 $92 Second 2 $50 $50 $50 $51 $51 $52 $92 $92 $92 $96 $96 $96 Third 3 $58 $58 $59 $62 $67 $77 $96 $96 $96 $100 $150 $250 From the above the following Net Returns can be calculated by assuming that Net Investment Returns are 7% pa. We are not suggesting that all these products will earn 7% per annum, but to judge their investment performance capabilities is a separate matter which would not be based on Net Returns. 2 Fund MySuper Member Admin NET RETURNS based on Net investment Returns of 7% per annum Fund Size Fee Fee & cost Account balance $b $ % $500 $1,000 $2,000 $5,000 $10,000 $20,000 $50,000 $100,000 $250,000 $500,000 $1,000,000 $2,000,000 ANZ SmartChoice % 2.74% 4.87% 6.14% 6.57% 6.78% 6.91% 6.95% 6.97% 6.98% 6.99% 6.99% AustralianSuper % -0.80% 3.10% 5.44% 6.22% 6.61% 6.84% 6.92% 6.97% 6.98% 6.99% 7.00% HOSTPLUS (administration fees and costs and net returns are the same as for AustralianSuper) UniSuper Accum % -1.16% 2.92% 5.37% 6.18% 6.59% 6.84% 6.92% 6.97% 6.98% 6.99% 7.00% HESTA % 1.41% 4.17% 5.83% 6.38% 6.66% 6.82% 6.88% 6.91% 6.92% 6.93% 6.93% REST % 2.05% 4.48% 5.94% 6.43% 6.67% 6.82% 6.87% 6.90% 6.91% 6.91% 6.91% Sunsuper % 0.29% 3.60% 5.59% 6.25% 6.58% 6.78% 6.85% 6.89% 6.90% 6.91% 6.91% CBUS % -0.88% 3.02% 5.36% 6.14% 6.53% 6.76% 6.84% 6.88% 6.90% 6.91% 6.91% QSuper % 6.83% 6.83% 6.83% 6.83% 6.83% 6.83% 6.83% 6.83% 6.83% 6.92% 6.96% First State Super % 1.65% 4.25% 5.81% 6.33% 6.59% 6.75% 6.80% 6.83% 6.84% 6.84% 6.85% MTAA Super % -1.47% 2.69% 5.19% 6.02% 6.43% 6.68% 6.77% 6.82% 6.83% 6.84% 6.85% CareSuper % 0.21% 3.52% 5.51% 6.18% 6.51% 6.71% 6.77% 6.81% 6.83% 6.83% 6.84% Telstra Super % -1.02% 2.88% 5.22% 6.00% 6.39% 6.62% 6.70% 6.75% 6.76% 6.77% 6.78% Vicsuper % -1.08% 2.82% 5.16% 5.94% 6.33% 6.56% 6.64% 6.69% 6.70% 6.71% 6.72% Plum Super Personal % -0.96% 2.86% 5.16% 5.92% 6.30% 6.53% 6.61% 6.65% 6.67% 6.68% 6.68% MLC Business Super % 0.03% 3.35% 5.33% 6.00% 6.33% 6.53% 6.59% 6.63% 6.65% 6.65% 6.66% BT Super for Life % 1.43% 3.98% 5.51% 6.02% 6.28% 6.43% 6.48% 6.51% 6.52% 6.53% 6.53% Mercer SmartSuper % -0.28% 3.11% 5.14% 5.82% 6.16% 6.36% 6.43% 6.47% 6.48% 6.49% 6.50% CFS FirstChoice E'er % 1.39% 3.94% 5.47% 5.98% 6.24% 6.39% 6.44% 6.47% 6.48% 6.48% 6.49% AMP SS Select % -0.92% 2.75% 4.95% 5.69% 6.06% 6.28% 6.35% 6.39% 6.41% 6.41% 6.42% Includes: APRA levies or expense allowances. Capped at $1000 per year. * Excludes: ORFR levies where identified. Source: Chant West Pty Limited fees & costs at 30 June 2015 Highest return % 6.83% 6.83% 6.83% 6.83% 6.83% 6.91% 6.95% 6.97% 6.98% 6.99% 7.00% Second % 2.74% 4.87% 6.14% 6.57% 6.78% 6.84% 6.92% 6.97% 6.98% 6.99% 7.00% Third % 2.05% 4.48% 5.94% 6.43% 6.67% 6.84% 6.92% 6.97% 6.98% 6.99% 6.99% Lowest % -1.47% 2.69% 4.95% 5.69% 6.06% 6.28% 6.35% 6.39% 6.41% 6.41% 6.42% Highest return 1 QSuper QSuper QSuper QSuper QSuper QSuper ANZ SC ANZ SC ANZ SC Aust Super Aust Super Aust Super Second 2 ANZ SC ANZ SC ANZ SC ANZ SC ANZ SC ANZ SC Aust Super Aust Super Aust Super UniSuper UniSuper UniSuper Third 3 REST REST REST REST REST REST UniSuper UniSuper UniSuper ANZ SC ANZ SC ANZ SC Lowest 20 MTAA Sup MTAA Sup MTAA Sup AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS CONCLUSIONS Dashboards overstate actual net returns. All four rankings are different from current dashboard The first three rankings rankings are different from current dashboard Current dashboard Dashboards understate actual net returns. The first three rankings rankings are different from current dashboard The above rankings and conclusions only consider first year administration fees and costs. They take no account of different service levels or different investment performance.

19 The following table shows an alternative analysis based on Total fees and costs 3 Fund Member Admin Investment ANNUAL TOTAL FEES AND COSTS * Fee Fee & costfee & cost Account balance $ % % $500 $1,000 $2,000 $5,000 $10,000 $20,000 $50,000 $100,000 $250,000 $500,000 $1,000,000 $2,000,000 ANZ SmartChoice $53 $55 $60 $76 $101 $152 $305 $560 $1,325 $2,600 $5,150 $10,250 UniSuper Accum $98 $101 $105 $119 $142 $188 $326 $556 $1,246 $2,396 $4,696 $9,296 AustralianSuper $95 $97 $103 $120 $149 $206 $377 $662 $1,517 $2,942 $5,792 $11,492 Sunsuper $81 $84 $90 $108 $138 $198 $378 $678 $1,578 $3,078 $6,078 $12,078 First State Super $64 $68 $74 $94 $126 $190 $384 $708 $1,677 $3,294 $6,526 $12,991 QSuper $4 $8 $15 $39 $77 $154 $385 $770 $1,925 $3,850 $7,700 $15,400 REST $61 $65 $72 $95 $133 $209 $437 $817 $1,957 $3,857 $7,657 $15,257 MTAA Super $101 $105 $112 $133 $167 $237 $446 $794 $1,838 $3,578 $7,058 $14,018 CBUS $95 $99 $106 $128 $165 $238 $457 $822 $1,917 $3,742 $7,392 $14,692 HESTA $69 $73 $82 $107 $148 $231 $480 $895 $2,140 $4,215 $8,365 $16,065 Vicsuper $96 $100 $109 $135 $178 $264 $521 $951 $2,240 $4,389 $8,686 $17,280 HOSTPLUS $96 $101 $110 $138 $184 $276 $552 $1,012 $2,392 $4,692 $9,292 $18,492 CFS FirstChoice E'er $65 $70 $80 $110 $160 $260 $560 $1,060 $2,560 $5,060 $10,060 $20,060 Telstra Super $96 $101 $111 $139 $186 $280 $561 $1,031 $2,439 $4,786 $9,480 $18,868 BT Super for Life $65 $71 $81 $114 $167 $274 $595 $1,130 $2,735 $5,410 $10,760 $21,460 Plum Super Personal $95 $101 $111 $143 $196 $302 $620 $1,150 $2,740 $5,390 $10,690 $21,290 MLC Business Super $83 $89 $100 $133 $187 $296 $623 $1,168 $2,803 $5,528 $10,978 $21,878 CareSuper $84 $89 $100 $134 $189 $300 $633 $1,188 $2,853 $5,628 $11,178 $22,278 Mercer SmartSuper $86 $92 $104 $139 $199 $318 $675 $1,270 $3,055 $6,030 $11,980 $23,880 AMP SS Select $93 $99 $112 $150 $214 $342 $726 $1,366 $3,286 $6,486 $12,886 $25,686 Includes: APRA levies or expense allowances. Capped at $1000 per year. * Excludes: ORFR levies where identified. Source: Chant West Pty Limited fees & costs at 30 June 2015 Lowest fees 1 $4 $8 $15 $39 $77 $152 $305 $556 $1,246 $2,396 $4,696 $9,296 Second 2 $53 $55 $60 $76 $101 $154 $326 $560 $1,325 $2,600 $5,150 $10,250 Third 3 $61 $65 $72 $94 $126 $188 $377 $662 $1,517 $2,942 $5,792 $11,492 Highest 20 $101 $105 $112 $150 $214 $342 $726 $1,366 $3,286 $6,486 $12,886 $25,686 From the above the following Net Returns can be calculated by assuming Gross (of fees and costs, but net of tax) Investment Returns are 7.5% pa We are not suggesting that all these products will earn 7.5% per annum, but to judge their investment performance capabilities is a separate matter which would not be based on Net Returns. 4 Fund Member Admin Investment NET RETURNS based on Gross investment Returns of 7.5% per annum Fee Fee & costfee & cost Account balance $ % % $500 $1,000 $2,000 $5,000 $10,000 $20,000 $50,000 $100,000 $250,000 $500,000 $1,000,000 $2,000,000 ANZ SmartChoice % 2.82% 4.94% 6.22% 6.64% 6.85% 6.98% 7.02% 7.05% 7.06% 7.06% 7.06% UniSuper Accum % -1.05% 3.03% 5.48% 6.29% 6.70% 6.95% 7.03% 7.08% 7.09% 7.10% 7.10% AustralianSuper % -0.78% 3.12% 5.46% 6.24% 6.63% 6.86% 6.94% 6.98% 7.00% 7.01% 7.01% Sunsuper % 0.36% 3.68% 5.66% 6.33% 6.66% 6.86% 6.92% 6.96% 6.98% 6.98% 6.99% First State Super % 1.75% 4.35% 5.91% 6.43% 6.69% 6.85% 6.90% 6.93% 6.94% 6.95% 6.95% QSuper % 6.85% 6.85% 6.85% 6.85% 6.85% 6.85% 6.85% 6.85% 6.85% 6.85% 6.85% REST % 1.99% 4.42% 5.88% 6.37% 6.61% 6.76% 6.81% 6.83% 6.84% 6.85% 6.85% MTAA Super % -1.41% 2.75% 5.24% 6.08% 6.49% 6.74% 6.83% 6.88% 6.89% 6.90% 6.90% CBUS % -0.92% 2.98% 5.32% 6.10% 6.49% 6.72% 6.80% 6.85% 6.86% 6.87% 6.88% HESTA % 1.27% 4.03% 5.69% 6.24% 6.52% 6.68% 6.74% 6.77% 6.78% 6.79% 6.82% Vicsuper % -1.03% 2.87% 5.21% 5.99% 6.38% 6.61% 6.69% 6.74% 6.75% 6.76% 6.77% HOSTPLUS % -1.08% 2.82% 5.16% 5.94% 6.33% 6.56% 6.64% 6.69% 6.70% 6.71% 6.71% CFS FirstChoice E'er % 1.55% 4.10% 5.63% 6.14% 6.40% 6.55% 6.60% 6.63% 6.64% 6.64% 6.65% Telstra Super % -1.10% 2.80% 5.14% 5.92% 6.31% 6.55% 6.62% 6.67% 6.69% 6.69% 6.70% BT Super for Life % 1.49% 4.04% 5.57% 6.08% 6.34% 6.49% 6.54% 6.57% 6.58% 6.59% 6.59% Plum Super Personal % -1.05% 2.77% 5.07% 5.83% 6.22% 6.45% 6.52% 6.57% 6.58% 6.59% 6.60% MLC Business Super % -0.06% 3.26% 5.25% 5.91% 6.24% 6.44% 6.51% 6.55% 6.56% 6.57% 6.57% CareSuper % -0.07% 3.24% 5.23% 5.89% 6.23% 6.42% 6.49% 6.53% 6.54% 6.55% 6.55% Mercer SmartSuper % -0.29% 3.10% 5.13% 5.81% 6.15% 6.35% 6.42% 6.46% 6.47% 6.48% 6.49% AMP SS Select % -0.93% 2.74% 4.94% 5.68% 6.05% 6.27% 6.34% 6.38% 6.40% 6.40% 6.41% Includes: APRA levies or expense allowances. Capped at $1000 per year. * Excludes: ORFR levies where identified. Source: Chant West Pty Limited fees & costs at 30 June 2015 Highest return % 6.85% 6.85% 6.85% 6.85% 6.85% 6.98% 7.03% 7.08% 7.09% 7.10% 7.10% Second % 2.82% 4.94% 6.22% 6.64% 6.85% 6.95% 7.02% 7.05% 7.06% 7.06% 7.06% Third % 1.99% 4.42% 5.91% 6.43% 6.70% 6.86% 6.94% 6.98% 7.00% 7.01% 7.01% Lowest % -1.41% 2.74% 4.94% 5.68% 6.05% 6.27% 6.34% 6.38% 6.40% 6.40% 6.41% Highest return 1 QSuper QSuper QSuper QSuper QSuper ANZ SC ANZ SC UniSuper UniSuper UniSuper UniSuper UniSuper Second 2 ANZ SC ANZ SC ANZ SC ANZ SC ANZ SC QSuper UniSuper ANZ SC ANZ SC ANZ SC ANZ SC ANZ SC Third 3 REST REST REST First State First State UniSuper Aust Super Aust Super Aust Super Aust Super Aust Super Aust Super Lowest 20 MTAA Sup MTAA Sup AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS AMP SSS CONCLUSIONS Dashboards overstate actual net returns. All four rankings are different from current d'board First three rankings rankings are different from current dashboard Current dashboard The above rankings and conclusions only consider first year fees and costs. They take no account of different service levels or different investment performance. Dashboards understate actual net returns. The first two rankings rankings are different from current dashboard