Super fees still too high
Superannuation fund members are still paying fees which are too high, notwithstanding the fact that their super funds are providing a greater range of choices and services, according to a new analysis published by actuarial consultancy, Rice Warner.
The analysis, written by consultancy's head of Superannuation Market Insights, Nathan Bonarius argues that while many members are getting a good deal, it is arguable that overall fees are too high and have not fallen as far as they could have given that assets have nearly tripled in the past 10 years.
Bonarius argues that the arrival of no frills MySuper accounts has placed downward pressure on management fees, creating further impetus for funds to properly review their overall value proposition for members.
He points to the fact that the sector has already been subject to an overall decrease in fees, with Rice Warner research released this month showing that as at 30 June 2013, management fees accounted for 1.12 per cent of assets ($16.9 billion annually), down from 1.20 per cent in 2012.
Bonarius said it was expected fees would trend down to 1.00 per cent of assets within two years as legacy products were gradually brought into the modern pricing structure.
He noted that there existed large variations in the levels of fees paid by different fund members with the variable including the size and nature of the fund, the size and bargaining power of employers, account balances, and investment risk.
"These differences can mean that some members may be paying less than 0.5 per cent a year while others may pay well in excess of 2.00 per cent," Bonarius said. "There are also fee subsidies for some members where employers meet some of the costs."
He said that while many members were getting a good deal, it was arguable that overall fees were too high and had not fallen as far as they could have given that assets had nearly tripled in the past 10 years.
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