Research reveals exactly how bad some super products are

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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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Written by Ben

34 Comments

Total Comments: 34
  1. 0
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    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.

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      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.

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      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.

    • 0
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      You have to be brain dead to invest in either a retail or industry fund.

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      floss….Union Super Funds are ethical something the rest aren’t.

    • 0
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      Union super funds are far from ethical.

    • 0
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      Industry funds have the lowest fees and consistently higher returns. Also, when you ring you get a real person who will help

    • 0
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      SMSFs have a real person too. The person who owns them.

    • 0
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      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.

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      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.

    • 0
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      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

  2. 0
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    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.

  3. 0
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    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!

  4. 0
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    Sunsuper are crooks and Ethical investment in the fund has no ethics

  5. 0
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    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.

  6. 0
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    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.

  7. 0
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    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.

  8. 0
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    Super would not be worth having with a return of only 6.47%.

  9. 0
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    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.

    • 0
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      Why would they ever have balance, after all YLC is a left wing ran organisation, probably about as far left as the ABC is.

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      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.

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      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.

  10. 0
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    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.

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