With the final recommendations of the Financial System Inquiry due to be delivered on Sunday, a roundtable of senior superannuation industry executives has criticised its initial suggestions that superannuation fees in Australia are too high.
The roundtable, conducted by Money Management's sister publication, Super Review, during the recent Association of Superannuation Funds of Australia (ASFA) conference in Melbourne concluded that the inquiry's use of research provided by the Grattan Institute earlier this year had produced a skewed view of the fees being applied to superannuation.
Deloitte partner, Russell Mason said that the reliance on the fee research in the FSI interim report had been very frustrating.
"Costs of Australian super funds are not high and that was a very frustrating aspect of the interim report," he said. "You look at investment – you break up investment management fees we've got some of the most competitive fees; the administrators' fees; the insurance – they're competitive."
Mason said it was inappropriate to compare Australian industry funds such as NGS Super or SunSuper with closed defined benefit funds in Europe.
"I mean its chalk and cheese where these employers absorb a lot of all the costs. I can show you a nil cost fund in Europe because of the way the funding is worded," he said "We have choice of funds. We have portability. We have a financial plan embedded in our funds. We have investment choice. We have insurance variation choice. A whole lot of things."
Pillar Administration chief executive, Peter Brooke agreed with Mason and said there was a danger of making the wrong comparisons.
"I'm concerned that the debate gets lost in some of the haze. You talk about Chile and you talk about all these sorts of superannuation offers but it's not a correct juxtaposition and I think that unless that's clearly explained we'll end up with some wrong results," he said.
The roundtable participants concluded that a significant contributor to superannuation costs in Australia had been the significant regulatory changes enforced on the industry.
