The latest KPMG Public Offer Superannuation Fund Index shows that industry funds charge the lowest administration fees compared to their retail counterparts, with Australian Primary Superannuation Fund emerging as the cheapest.
The report details fund size in terms of both members and asset under management, the number of investment options offered by each fund, and compares ongoing administration costs that funds charge small, medium and large employers as at December 31, 2002.
Industry funds also tended to have a flat fee structure for small, medium and large employers, rather than a sliding scale.
Top-ranked Australian Primary Superannuation Fund has a fee of just 0.18 per cent, runner up Retail Employees Superannuation Trust (REST) comes in at 0.20 per cent, and Australian Retirement Fund (ARF), HESTA, Superannuation Trust of Australia and Sunsuper were ranked equal third with 0.26 per cent.
KPMG Superannuation Services manager Wayne Hirt says: “Traditionally whilst a lot have become public offer funds, they were industry super funds and historically were set up to accept award contributions. These funds tend to have a lower number of features and investment options, and as a consequence have a lower cost structure.”
The report also confirmed the flow of money to the retail and industry fund sector at the expense of corporate funds, which saw a membership increase of only 2.6 per cent for the year to 30 September 2002, compared with an average of 9.5 per cent for retail and industry funds.
Hirt attributes this shift to the difficulties experienced by corporate funds in keeping up to date with regulatory and legislative demands, coupled with an expanded offering by retail funds.
KPMG has also warned super funds that they should be increasing employer awareness of the obligations they will face when the new quarterly superannuation guarantee contribution regime is introduced on July 1.
The report says that KPMG expects the cost of fund administration to increase where employers continually fail to meet the super guarantee deadline, and therefore recommends effective communication of future procedures to counteract these problems and reduce cost impact.
