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No exit fees could end up costing members more
The removal of superannuation fund exit fees, as announced in this week’s Federal Budget, may just result on all members paying more as “cross-subsidisation issues” arise, NGS Super acting chief executive, Laura Wright, has warned.
Wright said removing fees would not change that fact administrators charged for the provision of that service.
“It’s an activity and that has a cost,” she said.
Someone would need to be paying those amounts, and Wright warned that the money could come from higher fees for all members.
She said that this would result in long-term members unfairly “cross-subsidising” the exit costs of those who changed funds every few years.
While Wright understood the Government’s possible incentives, such as consolidating accounts and minimising fees for low balance accounts, she did not believe that exit fees posed a barrier to consolidation in practice.
The chief executive also said that in her long career working with super funds, she had heard very few complaints regarding exit fees.
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Hi. Due to growing medical costs I am considering making a financial hardship withdrawal from my current fund for the maximum 10k. I have a legacy account with the fund, and I am 5 years from retirement age and the age that was set in the policy. Although I am allowed to make this withdrawal, I have been told that there will be a +$600 exit fee. I have since discovered a new legislation that states all super funds to be banned from charging exit fees. Will this affect me? Is this law now applicable and if not when will it be? Thank you, David.
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