Call to standardise super fees
Two Melbourne-based actuaries have renewed their calls for the standardisation of the fees, charges and costs that are disclosed in superannuation funds’ product disclosure statements (PDS).
In a submission to the second phase of the Cooper Review into superannuation, the two actuaries, Colin Grenfell and Ray Stevens, have resurrected and modified a formula they first posed in 2003, arguing that such a standardisation would help consumers compare different superannuation plans and products.
They have also suggested that investment performance should be reported net of tax and investment transaction costs and net of all investment costs, and argue that investment fees and costs need to be split from non-investment fees and costs.
The pair said that the documentation should allow consumers to see two distinct references — one for investment fees and costs and one for superannuation fees and costs.
Grenfell and Stevens claim that the current disclosure regime, with respect to superannuation fees and charges, is ineffective and confusing. They add that the regime does not adequately help consumers compare the costs of different funds and, in many cases, can be potentially misleading.
They said that under their proposal consumers would not have to examine and understand each individual fee and cost that is reducing their account balance, because the material a fund issued would demonstrate the combined effect of the non-investment fees and costs over five-year periods for two standard contribution levels.
AUTHOR
Mike Taylor
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