The cost of retail funds are on average up to $887 more expensive than industry funds, according to a new research report on super fees and charges from the Australian Securities and Investments Commission (ASIC).
The report, ‘Monitoring Superannuation Fees and Costs’, found that the average maximum cost of retail funds was $2,276, compared to $1,389 for industry funds.
Defined as the sum of the management fees and contribution costs, the median cost of a retail fund was found to be $905, versus $437 for industry funds.
The report analysed information provided between October 1, 2005, and June 30, 2006, on the fees and costs of 1,270 superannuation products offered by 191 superannuation trustees.
It is the first in a series of at least five annual reports planned by ASIC to monitor trends in super fees and costs, following a request to do so from the Government following the introduction of Super Choice.
The report focused on superannuation fees and costs for balanced investment options as set out by trustees in compliance with the ‘enhanced fee disclosure regulations’, as applied to superannuation Product Disclosure Statements from July 1, 2005.
These assume that assets are allocated into a balanced investment option, there is a balance of $50,000 and a total of $5,000 is contributed in a financial year.
The aim of the worked example is to show how fees and costs can affect investments over a 12-month period, according a media release.
It also found that 95.2 per cent of all 1,270 super products did not have any establishment fees, and where an establishment fee was charged, the average fee was $48.94.
It also indicated that 73.23 per cent of products did not have any contribution fees, and among those that did the average was between $89.74 and $229.42 — or between 1.79 per cent and 4.58 per cent respectively.
Of the 1,188 products that did have management costs, the average fee was $658.65, or 1.32 per cent for every $50,000 in the fund.
Retail funds were found to have the highest average management costs at $763.07, or 1.53 per cent for every $50,000 in the fund.
The report also found that 82 of the 1,270 products (i.e. 6.46 per cent) did not charge any management costs.
Nearly 96 per cent of all products were found not have termination fees, and of the products that did charge, the average fee was $74.64.
