Super fund members run the risk of being given the wrong information about the performance of their funds, according to a recent analysis by the Actuaries Institute.

Recommendations, prepared for the actuarial profession and financial regulators, outline six principles to ensure that investment returns are reported accurately.

"The best way to compare performance is in accordance with our six principles, particularly principle number one - performance should be calculated on a time weighted basis," said Andrew Boal, convener of the Superannuation Practice Committee for the Actuaries Institute.

The analysis also warns against funds deducting off non-investment fees when comparing fund investment performance.

"We want to make sure fees and costs are calculated fairly. Our preference is that only investment fees and costs are deducted off the quoted investment returns," said Boal.

"Some funds may also be reporting crediting rates, rather than investment returns. It is important that crediting rates are not used as a measure for investment performance, because they can be distorted by significant cash flows, non investment related fees and flows to and from reserves."

Further principles put forward by the Institute suggest that reported returns should include returns for periods from 1 July to 30 June and that market values should be used for all investments with adjustments for effective exposure where appropriate, for example, by allowing for the cash-backed futures and delta-adjusted option exposure.

"We need to make sure we are not taking any shortcuts, going forward we need a system that is fair across all funds," said Boal.