Labor pledges to scrap super exit fees

By Rebecca Evans

Shadow Minister for Retirement Incomes and Savings Senator Nick Sherry has announced the Labor Party’s commitment to abolish exit fees on superannuation ahead of the up-coming Federal election.

Sherry has slammed the Coalition Government’s ‘do nothing’ attitude towards regulation of anti-competitive fees and charges and has challenged industry groups to provide a solution to a problem that, according to Sherry, is of their own making.

Federal Treasurer Peter Costello says in light of the recent passing of choice of superannuation legislation there should be an ability to move superannuation savings with the minimal cost and complexity available.

“I would thoroughly recommend to the superannuation funds themselves that as a measure of competitive discipline, that those fees be made as low as possible and I will be seeking to have some discussions with the funds in relation to that,” Costello says.

Sherry says this does not go far enough.

“Exit fees will spread if the Liberal Government allows them to remain a component of so-called choice of fund from July 1, 2005, as some funds seek to ‘lock-in’ monies under management regardless of performance,” he says.

In a letter to the Financial PlanningAssociation (FPA) chief executive Kerrie Kelly and the Investment and Financial Services Association (IFSA) chief executive Richard Gilbert, Sherry expressed a Labor Government would provide legislative support to ensure a ‘level playing field’ in removing existing exit fees where they apply, and throwing the burden back to the industry to provide a legal remedy.

“IFSA and the FPA, which supported the so-called super choice regime, should now come up with a solution on existing exit fees,” Sherry says.

“As a matter of urgency, IFSA and the FPA should consult with their members and agree on a policy to allow consumers choice to move their superannuation savings from July 1 next year,” he says.