15th Apr 2019
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Research reveals exactly how bad some super products are
Author: Ben Hocking
Research reveals bad super products

Some bank and insurance company-owned super funds are charging almost twice as much in fees compared to profit-to-member funds, according to new research commissioned by the Australian Institute of Superannuation Trustees (AIST).

The Fee and Performance Analysis 2019 by leading superannuation research house SuperRatings investigates the differences between fees and returns across the many super products on offer and finds significant disparities between the fees charged by for-profit retail funds and profit-to-member funds.

The typical annual fee paid by someone with a $50,000 super balance in a high growth investment option offered by a retail fund is $942. This compares to an average $591 in fees charged by a profit-to-member fund for the same product.

The difference is even more stark for those wanting to put their superannuation into more defensive investment products, such as people approaching retirement.

The SuperRatings research found that a person with a balance of $250,000 in a mostly cash invested ‘secure’ option in a retail fund would be paying on average $3255 per annum, or 274 per cent more for the same product in a profit-to-member fund.

The research notes that as account balances increase, the fees for the profit-to-member sector become even more competitive, given the lower overall asset-based fees charged.

AIST chief executive Eva Scheerlinck said the report highlighted the need for regulators to provide tools that made it easy for members to compare fees and charges and make informed decisions about which super products were best for them.

“Currently, it is almost impossible for members of Choice funds to compare the fees and charges of their super fund. In the 21st century, this shouldn’t be that hard,” she said.

“Many members are paying almost double the fees for less returns on their retirement savings. It’s hard to see how the trustees of these funds can justify this in the post-royal commission environment.

“People in low-performing funds will be losing out on their superannuation and they won’t even know it. This is unacceptable.”

In terms of returns, SuperRatings data shows that median profit-to-member MySuper funds delivered 6.47 per cent over the three years to 31 December 2018, well above the 4.94 per cent achieved by the for-profit retail super funds.

The research notes that historical comparisons between fees are harder now, given that the introduction of new fee and cost disclosure laws have changed the way funds disclose their fees.

Are superannuation fees a concern for your retirement? Have you ever switched funds because of exorbitant fees?

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    COMMENTS

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    floss
    16th Apr 2019
    10:06am
    You would have to be brain dead to invest with a retail fund,industry funds were bought about by trade unions and do a great job for working people.
    Tom Tank
    16th Apr 2019
    10:23am
    Contrary to what some may state the industry funds have employer as well as union representatives on their Board of Trustees. It is simply not possible for an Industry Super Fund to transfer any member's money to a union. They are tied to the same rules that apply to all super funds but are simply more ethical in their operation.
    Tom Tank
    16th Apr 2019
    10:23am
    Contrary to what some may state the industry funds have employer as well as union representatives on their Board of Trustees. It is simply not possible for an Industry Super Fund to transfer any member's money to a union. They are tied to the same rules that apply to all super funds but are simply more ethical in their operation.
    Old Geezer
    16th Apr 2019
    11:22am
    You have to be brain dead to invest in either a retail or industry fund.
    jackie
    16th Apr 2019
    11:35am
    floss....Union Super Funds are ethical something the rest aren't.
    Old Geezer
    16th Apr 2019
    11:52am
    Union super funds are far from ethical.
    Sundays
    16th Apr 2019
    12:18pm
    Industry funds have the lowest fees and consistently higher returns. Also, when you ring you get a real person who will help
    Old Geezer
    16th Apr 2019
    12:20pm
    SMSFs have a real person too. The person who owns them.
    Old Geezer
    16th Apr 2019
    12:21pm
    Cheapest industry fund I could get for my super was over $20,000 a year more than 10 times what it costs to run a SMSF.
    Sundays
    16th Apr 2019
    12:27pm
    OG the Financial Ombudsman would disagree with you. SMSF are for people who understand what they are doing and have eneough to invest. For others the lack of knowledge and compliance has not been worth it. Many don’t actually manage their own SMSF but outsource to financial advisers who have ripped them off.
    arbee
    16th Apr 2019
    3:37pm
    Tom Tank, the industry funds may well not transfer members money to a union, but they sure as hell have sweetheart deals going where they pay the union leaders on their boards exorbitantly high fees with the knowledge that most of these amounts are then just paid straight back to the union in one form or another by that board member
    Adrianus
    16th Apr 2019
    10:52am
    Who would know what the real cost is in running any of these funds?
    If a Super Fund decides to spend $millions on TV advertising or sponsors a sporting team, where does that show up in the balance sheet?
    All we see is the "credited rate."
    A little more clarity is needed before we can have a sensible discussion on the fees and charges of super funds.
    Old Geezer
    16th Apr 2019
    11:29am
    There are a lot more hidden fees than fees actually charged in most funds. That's why SMSFs do so much better than either retail or industry funds.
    ozrog
    18th Apr 2019
    8:47pm
    Old Geezer you are so funny eith your comments. Most wrong. Move yiur millions ofshore that moght help you earn more.
    Ted Wards
    16th Apr 2019
    11:12am
    just got a letter to say from Australian Super that there is a significant increase in fees from 1 July this year. Not happy jan!
    Old Geezer
    16th Apr 2019
    11:31am
    I'm hearing that many are raising their funds and what does concern me is the quality of investments in industry funds with them just betting against one another. Who will be first to pull the plug?
    Adrianus
    16th Apr 2019
    11:39am
    Ted, isn't that the same fund which had a moratorium on roll outs?
    danielboonjp
    16th Apr 2019
    11:25am
    Sunsuper are crooks and Ethical investment in the fund has no ethics
    Old Geezer
    16th Apr 2019
    11:26am
    I wouldn't be happy that my super contribution tax was not being sent to the ATO but used to offset the franking credits in either a retail or industry fund so that those collecting a pension from the same fund were paid more under Labor either.

    If it is a rort not to refund franking credits for SMSFs then this is a even bigger rort that the funds or Labor is not letting on about to anyone.
    abundanced
    16th Apr 2019
    12:03pm
    Australia the lucky country - pffft! It should be the Australia the greedy country. A country that tries to keep up with the Joneses and fleeces all of its citizens in the process.
    old frt
    16th Apr 2019
    12:09pm
    Adrianus, have never heard of the Labor party referred to as a sporting team . All that advertising supporting Labor I always thought it was politically motivated not sponsoring a sporting team.
    KSS
    16th Apr 2019
    12:42pm
    EISS super sponsors the Sharks women's team!
    Old Geezer
    16th Apr 2019
    12:26pm
    Super would not be worth having with a return of only 6.47%.
    Not a Bludger
    16th Apr 2019
    1:36pm
    Again a highly biased commentary!
    AIST is owned by union, thug boss controlled industry funds into which they force employees to pay their super.
    What blind Freddie would ever think that AIST + their mates at SuperRatings would produce a report that said anything different to the one sided claptrap above.
    Time for the editors of YLC to insist on some balance in their reportage.
    arbee
    16th Apr 2019
    3:39pm
    Why would they ever have balance, after all YLC is a left wing ran organisation, probably about as far left as the ABC is.
    Misty
    16th Apr 2019
    7:05pm
    I don't know why you 2 bother to read any YLC'S Topics or bother to comment if that is the way you both feel.
    80 plus
    17th Apr 2019
    7:59am
    If the report was published by ALT/CON or The News Corporation would arbee, Not a Bludger and Old Geezer then accept is not biased? Stop posting Negative statements with out any facts or figures just L.N.P. HQ VIEWS. Read the article again.
    Old Man
    16th Apr 2019
    1:37pm
    Australia is a wonderful country to live in, bring up kids in and choose where we want our investments to be. This subject is like politics and religion; they shouldn't be discussed because it's a waste of time. No amount of debating, pleading, cajoling or downright rudeness will change the minds of those who believe that they have made a right choice for themselves.
    heyyybob
    16th Apr 2019
    2:34pm
    An attention span of 8-12 seconds should do it ;)
    The Phonse
    16th Apr 2019
    3:54pm
    If your retired and over 65 and have no income other than your super investments and it produces less than the tax threshold then you are better off being out of it and not getting charged any fees.
    Rae
    17th Apr 2019
    8:52am
    Exactly so. You can risk a percentage of your savings in low cost index funs and achieve similar results for far less. When the market goes down all but the few clever shorting hedge funds will fall anyway. At least in a fund outside superannuation you can take profits out move into cash quickly if you need to. Relying on others to manage your future is very risky and Super has huge risks from government rule changes as well.
    Maggs
    18th Apr 2019
    10:23am
    This is doing my head in!!!! Makes me want to just spend all my money and get a pension!!
    ozrog
    18th Apr 2019
    8:43pm
    Old Geezer you must have millions in your super fund to pay $20,000 in fees.


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