Fees – how the Govt gave with one hand and took with the other
The Government’s efforts to force down superannuation fees appears to have been significantly undermined by the increased regulatory burden it has imposed on superannuation funds.
Evidence provided to a Parliamentary Committee has revealed that while technological innovations have helped funds to reduce costs at one level, those cost-savings have then been eroded by the imposition of more regulatory imposts.
Small to mid-size independent super fund, AMG Super has told the House of Representatives Standing Committee on economics that the cost-savings delivered via the straight-through processing of SuperStream, the use of robotics and bulk processing have been offset by additional costs imposed elsewhere.
“These innovations have delivered costs savings. However, as the fund has grown, and other compliance obligations have increased the resources have been deployed to other areas of the business,” the fund said.
“It is difficult to quantify the exact cost savings but below is an estimate for each item:
- Straight Through Processing of SuperStream – approximately $30,000 pa
- Bulk processing / transaction capabilities – approximately $25,000 pa
- Annual statements delivered electronically – approximately $20,000 pa
- Use of robotics for data extract and analysis such as for invoicing – $25,000 pa.
“These innovations have delivered costs savings. However, there have been significant other regulatory costs over the same period such as, increase [Australian Prudential Regulation Authority) APRA reporting obligation, [Protecting You’re your Super] PYS and [Putting Members Interests First] PIMF,” the superannuation fund said.
It said that despite this the fees charged to AMG Super members had decreased across the fund over the last decade.
- MySuper member’s fees have reduced by 0.48% pa over the last decade;
- Personal Super member’s fees have reduced by 0.11% pa over the last decade; and
- Pension member’s fees have reduced by 0.26% pa over the last decade.
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