The Productivity Commission has had super under the microscope for a while now, and the banking royal commission is also currently grilling Australian funds over issues such as lack of transparency on fees charged, as well as concerns over insurance, advice given to members and the types of investments being made.
The top 20 super funds in Australia alone charge their members around $3.4 billion combined in fees, according to analysis of official data.
And that’s not including fees paid to fund directors and boards.
For that you can add more than $44.65 million each year across 100-plus funds. Then, on top of that, you can add another $5 billion in administrative and operating expenses.
While super funds have largely escaped scrutiny over the years, the spotlight is now on them. Australians losing billions every year in fees, insurance and low returns should be the beneficiaries of this investigation.
According to 2017 data from the Australian Prudential Regulation Authority (APRA), when it comes to total administration and operating expenses, retail fund BT’s Retirement Wrap tops the list charging a total of $588.5 million, followed by another retail fund, MLC, which charged $301.3 million and, in third, industry giant AustralianSuper with $296.02 million.
But when you break down the sheer number of members in the top charging funds, the fees charged per member by BT are actually at the low end of the scale.
Members of a BT fund, which has 1,226,524 accounts and $86.18 billion in total assets and total expenses at $588,498,000 would pay about $480 a year each, compared to the $9580.78 a year paid by members of Perpetual Super Wrap, which has 1207 members with total assets of approximately $1.2 billion (as at 30 June 2017).
“Incredibly we found 11 funds who charge more than $1000 per member per year on operating and administrative expenses,” said Mr Brycki.
“Ask anyone who has tried contacting their super fund for information and you’ll hear a common story of long waiting times and canned responses that don’t answer the question. This type of service isn’t worth $10 a year let alone $1000.”
Only 15 funds were efficient enough to charge under $100 per member in annual fees for operating costs.
Read a full analysis on www.businessinsider.com.au
Do you know how much you’re charged in fees? Do you pay for insurance when you probably don’t need to?