The superannuation industry has passed a significant milestone with average fees having dropped to one per cent of assets, according to actuarial research house, Rice Warner.
The company’s annual Superannuation Fees Report, released late last week, showed that average fees dropped to one per cent of assets or $22.4 billion for the year ended 30 June, last year, and said this represented a significant milestone demonstrating that the superannuation system had become more efficient as it had matured.
The Rice Warner analysis noted that in 2003 the former Labor shadow Minister for Retirement Incomes and Savings, Nick Sherry, had suggested that superannuation fees, then averaging 1.37 per cent, be capped at one per cent and that it had been regarded as an ambitious target.
Despite the fees dropping to one per cent of assets, Rice Warner said there were still inefficiencies in unneeded multiple accounts, subscale funds that struggle to deliver value, and several underperforming products.
“However, overall, the industry is continuing to improve its offer squeezing in more member services and benefits while reducing its headline fee rates,” it said. “An example of this is the recent announcement by Australia’s largest fund, AustralianSuper, that its MySuper investment fee reduced from 0.75 per cent to 0.66 per cent per annum.”
Rice Warner said that despite this, the industry continued to be hampered by incorrect and misleading commentary on the level of fees for superannuation.
“Hysterical headlines emphasising the total fees of ‘tens of billions of dollars’ are misleading as are comparisons to the electricity market,” it said. “We need to change the focus to value not cost.”
