Heron Quality Star Ratings Announced for 2008

Released: 4 February, 2008

The Heron Partnership has announced the Heron Quality Star Ratings for 2008 for both Corporate and Retail superannuation products.  Of the 157 individual products included in the 2008 assessment, the highest award of 5 Stars went to 23 Corporate products and 31 Retail products.  Highlights for the year include:

• CARE Super top rated retail product
• ING Corporate Super top rated corporate product
• Concern that rising fees will result in declining retirement benefits
• Downturn in investment markets will mean a greater focus on fees

The Heron Partnership’s Managing Director, Chris Butler said “We are delighted to announce that the following products achieved the highest overall rating for their respective product classification in our 2008 assessment:

Heron’s Top Rated Superannuation Products

Top Rated Retail Product: CARE Super

Top Rated Corporate Product: ING Corporate Super

Mr Butler said “Both products have made enhancements to their offering, making them even more attractive to members.  ING has improved their insurance offering, included some new investment options, enhanced their communications, introduced fee flexibility as well as some innovative member servicing initiatives.  CARE Super’s enhancements include a new financial planning service and improvements to their education services, communications and web site.”

Since the 2007/08 Heron Quality Star Ratings were released in July 2007, the Aviva - Navigator Personal Retirement Plan, AXA – Generations, BT SuperWrap - Personal Super Plan, FSP Super Fund, Hostplus Executive and the Non-Government Schools Superannuation Fund have been rated as “outstanding quality” and awarded 5 Heron Quality Stars.

Based on The Heron Partnership’s rating system, the Retail products that achieved the 10 highest scores comprised 4 commercial master trusts and 6 industry funds, whilst the Corporate products with the 10 highest scores are all commercial master trusts.

The 23 Corporate superannuation products and the 31 Retail superannuation products rated as “outstanding quality” and therefore awarded 5 Heron Quality Stars are (in alphabetical order):

 The Heron Partnership’s Managing Director, Chris Butler, said, “When Heron assesses superannuation products we consider about 150 product features grouped under 5 Areas of Importance of Investment Arrangements, Contributions, Ancillary Benefits, Communications and Insurance.  Investment Arrangements and Insurance have the highest weightings of 55% and 30% respectively”.

In respect to Investment Arrangements, AMP’s SignatureSuper achieved the highest rating of all corporate products, the Mercer Super Trust - Personal Superannuation Division achieved the highest rating of all commercial master trusts and Sunsuper achieved the highest rating of all industry funds assessed.

In respect to Insurance Arrangements, BT’s Lifetime Super - Employer Plan achieved the highest rating of all corporate products, AXA’s Summit the highest rating of all retail products and Cbus the highest rating of the industry funds assessed.

Mr Butler, said, “Although the superannuation market remains very competitive and product improvements have been numerous, as a general comment fund members are paying more in fees.  As in the past, once investment returns fall below double figures members become more aware of the extent of fees being charged.”

To illustrate the fee movement over the past 12 months or so, Mr Butler said, “If you take a membership period of 25 years and assuming the same contribution and investment returns, there has been a decrease of about 5% in the average retirement benefit produced by all retail superannuation products assessed by Heron, compared with 12 months earlier.  Interestingly, if you only include the thirty-one 2008 5 Star rated retail products, the decrease in retirement benefit is about 2.3%!”

“In addition, there is a considerable difference between the retirement outcomes of each of the retail products.  For example, based on the above same assumptions, First State Super and AGEST, being the two lowest cost 5 Star rated retail products, produce a retirement benefit some 17% greater than the average retirement benefit produced by the combined thirty-one retail products.”

Heron’s analysis of administration and investment fees excludes any adviser fees an individual has agreed to pay their financial planner; hence a like with like comparison.

“Due to the variance between superannuation products, we recommend individuals seek advice from a financial planner to assist them select the product that best suits their requirements for what is invariably a long term investment.”  Mr Butler said.

When releasing the ratings for 2008, Mr Butler, said “The primary goal of the Heron Quality Star Ratings is to provide a realistic and objective representation of the strengths and weaknesses of a product.  The ratings are based on feature specific benchmarks which guide Heron’s assessors to rate the feature objectively, with all products therefore being rated on the exact same basis.  The ratings for each feature are aggregated to an overall numeric rating for each product”.

 The Heron Partnership’s product research and assessments are provided through their Heron Advisor internet based research service.  This research service is utilised by an increasing number of product issuers, dealer groups and financial planners as a superannuation research tool for super “choice of fund” advice, corporate super tenders and super switching compliance.

The Heron Quality Star Ratings have 5 levels as follows:

¶¶¶¶¶        Outstanding

¶¶¶¶           Commendable

¶¶¶              Good

¶¶                  Poor

¶                     Unacceptable

Details of the Heron Quality Star Ratings, including the assessment methodology and products awarded with 5 Heron Quality Stars, are featured on The Heron Partnership’s web site.  In addition, through the Heron Advisor service, subscribers are able to access the Quality Star Rating for all products as well as the detailed product research.