POWERED BY MOMENTUM MEDIA
The multi-million hit to industry super fund fees
Superannuation funds, and particularly industry funds, could be facing the loss of up to $150 million in fees as a result of members emptying their accounts under the Government’s hardship early release superannuation regime.
New analysis conducted by HFS Consulting had also pointed to the degree to which industry superannuation had been disproportionately hit by the early release regime with around 65% of all payments made coming from industry funds, compared to 26.03% for retail funds.
However, the HFS Consulting analysis had revealed the impact on the lifeblood of superannuation funds – fees.
“…there has been a total of 2,988,976 initial applications for withdrawal,” it said.
“If 50% of the applicants were to run their balances to zero and close the accounts, this would see almost 1.5 million fewer accounts. Assuming an average administration fee of $100 a year this equates to a loss of $150 million of fees.”
The analysis noted that additional fees would also be lost to fees charged for funds under management and lucrative fees for life and disability insurance.
Looking at the way in which industry funds had been disproportionately hit, HFS noted that total payments made as a percentage of the total membership benefits (in effect the net assets of the fund), industry funds had paid out 2.9% – more than double retail funds at 1.32% and public sector funds at only 0.71%.
“The average payment made across all funds are quite similar. With an average of $7,638 for industry funds, $7,917 for retail, $8,384 for public sector and $9,201 for corporate funds. This would suggest that many are deciding to make full withdrawals,” it said.
“The ‘average of averages’ (as opposed to a simple average) is a little higher. What is alarming is the average payment as a percentage of the average balance held in the funds. For industry funds, the average payment is $8,077 while the average balance in the fund is only $77,794. This means that 10.38% of the average balance is being withdrawn. For retail funds it is 5.79%.”
Recommended for you
The two funds have announced the signing of a non-binding MOU to explore a potential merger.
The board must shift its focus from managing inflation to stimulating the economy with the trimmed mean inflation figure edging closer to the 2.5 per cent target, economists have said.
ASIC chair Joe Longo says superannuation trustees must do more to protect members from misconduct and high-risk schemes.
Super fund mergers are rising, but poor planning during successor fund transfers has left members and employers exposed to serious risks.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
88.01 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.24 3 y p.a(%)
4
Pengana High Conviction Equities B
40.36 3 y p.a(%)
5
Pengana High Conviction Equities A
40.34 3 y p.a(%)
