Industry funds would be even more attractive and able to charge “radically lower” fees if they held much larger member balances, Industry Fund Services executive chair Garry Weaven told CMSF delegates.
He said there were currently 132 industry funds, which had an average fund balance of $5,590 and charge an annual administration fee of $76 or 1.35 per cent, rising to $249 or 0.50 per cent for account balances of $50,000.
This was in contrast to the 260 retail funds with average fund balances of $18,350 and which charge $134 or 2.40 per cent, rising to $1,200 or 2.40 per cent for account balances of $50,000.
“What that actually tells you is one simple message: if industry funds with their substantial fixed administration charges could have large member balances, they would be radically cheaper than the average retail fund,” Weaven said.
He noted that over 20 years, a one per cent asset charge resulted in an 11 per cent reduction in superannuation benefits, while over 40 years this rose to 22 per cent.
