Fees drop after super mergers

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Superannuation funds are slowly clawing back some of the losses caused by the financial impact of the COVID-19 pandemic, and there is further good news for members of some funds.

Research house Rainmaker Information has released the results of a study that shows super funds that have merged have seen a significant reduction in the level of fees members are charged.

According to the results of the study, superannuation mergers have led to a 20 per cent decrease in fees for fund members.

Of the 13 mergers, 11 were traditional mergers, while two were integrations of super funds, being the combining of Virgin Super and Mercer Super Trust and the integration of the trustee offices of Catholic Super and Equipsuper.

In all 11 of the traditional mergers, the more expensive funds’ fees were reduced, with an average decrease of 21 per cent.

Most of the funds that went into the merger with the lower fees also saw their fees drop (seven of the 11), a reduction of 5 per cent on average.

Rainmaker’s executive director of research, Alex Dunnin, said nine of the 11 funds saw their fees drop or stay the same when comparing the average pre-merger fees against the post-merger fees, and that the average fall was 14 per cent.

“Mergers have created efficiencies and economies of scale for the funds, which has led to members being better off,” said Mr Dunnin.

“Regulators and political leaders continue to heap pressure on funds to merge, particularly if they lack scale or consistently under perform.”

He explained that the two fund integrations saw fees rise on average across the funds, but that was to be expected.

“Fees don’t go down just because a super fund merges, they go down because the trustees redesign the product.” Mr Dunnin said.

“Products are more likely to be redesigned in a merger but not when funds just combine their back offices.”

The funds that were included in the study are listed here:

Seven mergers have occurred in the 18 months since the findings of the Productivity Commission were announced, compared to six in the two years prior.

Has your super fund merged recently? Have you seen a reduction in the fees charged on your account? Would you consider changing to a fund with lower fees to protect your investment?

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Written by Ben

3 Comments

Total Comments: 3
  1. 0
    0

    “Has your super fund merged recently? Have you seen a reduction in the fees charged on your account? Would you consider changing to a fund with lower fees to protect your investment?”

    Our fund is in the process of merging so a reduction in fees is as yet unknown but we remain optimistic. We are very happy with our fund, the information sent out on a regular basis and the return as compared with similar funds so we won’t be changing at this time.

    Interestingly, I read an article today on mergers of super funds and one of the major stumbling blocks in negotiations is how many board members there will be under the merger plans. There are board members drawing in excess of $1M annually and, naturally, there is a reluctance to relinquish the trough where snouts are firmly embedded.

  2. 0
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    ANZ OneAnswer was acquired by IOOF Holdings during the year but, if anything, there seem to be more fees than before, although I haven’t calculated them out yet.

  3. 0
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    Fees drove me quickly to open a self-managed super. In the first months of using a managed super, my fund gained 12.5%. In that case the fees were considered by my wife & I as tolerable. The next month produced a loss of 12.5% with the same fees, s o I was back where I started & paying someone for the ‘pleasure’ of losing my money. I felt I could lose money just as easily, without having to pay a fee & I did so for too long under my own ‘guidance’. I finally realised where I’d gone wrong, & began correcting my mistakes, Now it’s fine despite a 23% loss for the 2020 financial year.


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