POWERED BY MOMENTUM MEDIA
Super fund ‘choice’ products charging up to four times more in fees
Bank and retail owned superannuation funds offering ‘choice' products are charging members up to four times more for investment options that deliver lower returns, according to a report.
The SuperRatings report, commissioned by The Australian Institute of Superannuation Trustees (AIST), examined fees, investment returns, and assets of over 5,000 investment options in the MySuper and Choice environment.
It found with MySuper default funds, consumers were paying on average 28 per cent more if they were in a retail fund or bank-owned fund.
In the choice environment, retail and bank-owned funds charge between 85 per cent and 300 per cent more.
In the choice environment, not-for-profit funds on average outperformed retail and bank-owned products over the medium to long term (seven to 10 years).
AIST chief executive, Tom Garcia, said the findings highlighted the need for greater disclosure and transparency in the Choice environment so that consumers had a between understanding of the exorbitant fees being charged on some products by some retail and bank-owned funds.
"In a compulsory super system, consumers are vulnerable if they are unable to compare the fees and returns of like-for-like products," he said.
AIST senior policy adviser, Karen Volpato, said the lack of a level playing field in terms of disclosure and reporting to the Australian Prudential and Regulation Authority (APRA) between the not-for-profit and the bank and retail-owned super funds had a huge impact.
"This makes it difficult for anyone — including APRA or the Productivity Commission — to meaningfully review the efficiency and competitiveness of the superannuation system," Volpato said.
To fix this, Volpato suggested:
- "Retail fund platforms must disclose in the same way as other superannuation products;
- Given the huge discrepancy in fees and the non-inclusion of retail platforms, the development of ‘industry standards' as proposed in the recent release of RG97 Disclosing fees and costs in PDSs and periodic statement highlights the need for greater legislative prescription; and
- The Australian Securities and Investments Commission (ASIC) should update its 2010 outsourcing fees research, which examines the impact of related party transactions."
Recommended for you
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
This article is a joke. Commenting on disclosure requirements for retail funds. So industry funds fully disclose do they - their association with unions, union fees, advertising costs and the underlying returns and valuations policy. No shock that both parties commenting are heavily associated with the IFN