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Call to standardise super fees
Two Melbourne-based actuaries have renewed their calls for the standardisation of fees and that charges and costs be disclosed in superannuation funds' Product Disclosure Statements (PDS).
In a submission to the second phase of the Cooper Review into superannuation, the two actuaries, Colin Grenfell and Ray Stevens, have resurrected and modified a formula they first posed in 2003 arguing that such a standardisation would help consumers compare different superannuation plans and products.
They have also suggested that investment performance should be reported net of tax and investment transaction costs and net of all investment costs, and argued that investment fees and costs needed to be split from non-investment fees and costs.
The pair said the documentation should allow consumers to see two distinct references - one for investment fees and costs and one for superannuation fees and costs.
Greenfell and Stevens claimed that the current disclosure regime with respect to superannuation fees and charges is ineffective and confusing and does not adequately assist consumers to compare the costs of different funds and, in many cases, can be potentially misleading.
They said under their proposal consumers would not have to examine and understand each individual fee and cost reducing their account balance because the material a fund issued would demonstrate the combined effect of the non-investment fees and costs over five-year periods for two standard contribution levels.
AUTHOR
Mike Taylor
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