IFSA report shows falling fees

A research report commissioned by the Investment and Financial Services Association (IFSA) has highlighted what it sees as “strong downwards pressure” on the actual fees paid by super fund members.

The research, conducted for IFSA by Rice Warner Actuaries, covers the fees paid by investors in the year to June 2008.

IFSA said the report shows “intense and healthy competition” in fees, attributing this to the introduction of super choice in 2005.

But at a briefing on other superannuation matters today in Sydney, the Minister for Superannuation and Corporate Law, Senator Nick Sherry, was dismissive of the idea super fees had fallen significantly.

Sherry said while the introduction of super choice had reduced fees in other countries, it was yet to have that effect in Australia. Sherry said he is committed to reducing the average cost of superannuation fees to below 1 per cent per annum.

Michael Rice, director of Rice Warner Actuaries, said this year’s research showed overall fees for the superannuation industry averaged 1.21 per cent.

“This compares to 1.26 per cent in 2006 and is very different to the 2 per cent figure used by some industry commentators,” Rice said.

Sherry said Government data showed average annual fees held consistently at 1.25 per cent.

The IFSA/Rice Warner Actuaries report said as the cost of advice is included in total fees charged, the only way to make comparisons is to either remove the cost of advice for personal superannuation or add the cost onto the average fee for the other sectors.

The report said the average fees for personal super excluding the cost of advice is 1.47 per cent, down from 1.57 per cent in 2006.

IFSA chief executive Richard Gilbert said while the commentary about super fees relies on the maximum fee published in product disclosure statements, “this fee is rarely the actual fee paid by investors and is therefore not a sound basis for analysing competition within the industry”.