Members of retail superannuation funds have experienced lower returns than corporate, industry and public sector funds and even simple bank accounts over the past 14 years, according to research from Industry Super Network (ISN).

The industry fund lobby group took data from the Australian Prudential Regulation Authority (APRA) over the period June 1996 to June 2010 and found retail funds returned on average 3.66 per cent a year, while industry funds returned 5.35 per cent a year.

The average cash rate of return over this period was 4.23 per cent a year, while public sector funds were the best performers with an average return of 6.30 per cent a year.

Corporate funds returned 5.84 per cent a year.

"This research shows that the Australian retail superannuation sector is yielding for the most part unacceptably poor returns to its members," ISN chief policy officer Matt Linden said.

"It is extraordinary that the practices of major retail super funds over a long period of time have reduced the average returns of their members to the point where their super would be better invested in the bank."

The report also found retail funds paid 2.6 times the market rate on average to related parties for services.

But Financial Services Council (FSC) chief executive John Brogden said the research was misleading.

"The [APRA] data reflects funds as a whole rather than the individual investment option - balanced, growth, defensive - that a person is invested in," Brogden said.

"The deliberate misrepresentation of these figures ensures only one result - reduced confidence in superannuation of all Australians."

APRA combines the performance of all investment options within a super fund and provides an aggregate performance return of the fund.

It then takes the average return of each fund and aggregates it at sector level (retail, industry or public sector), producing a rate of return for each sector.

By producing an average performance across funds and sectors, high growth or aggressive investment options are lumped together with low-risk options.

A further significant factor that distorts fund level performance is that the age of fund members has a significant impact on asset allocation by super fund providers.

"A conservative allocation designed for an older member base will generally produce a lower return than an investment which is comprised of mostly growth assets," Brogden said.

"Retail funds have a large number of members in pension phase or nearing retirement.

"These fundamental differences are not reflected in the APRA data.

"The MySuper reforms will see APRA start to produce league tables that will allow for simple and clear comparisons to be made."