Super fees on their way down
There has been a clear downward trend in superannuation fees over the past decade, with advice fees having also decreased, according to the latest Rice Warner Actuaries report commissioned by the Financial Services Council (FSC).
However, many clients might not benefit from lower fees until a product rationalisation mechanism is introduced for superannuation, according to FSC chief executive John Brogden.
The report found industry-wide average fees declined by 12 per cent between 2002 and 2011 (a drop from 137 to 120 basis points), which was mostly driven by scale and technology.
But at 210 basis points, legacy products have significantly higher than average fees, Brogden added.
The report puts beyond doubt the need to introduce a product rationalisation mechanism for superannuation, he said.
"The Government is standing in the way of members benefiting from fee reductions in contemporary products," Brogden said. "We call on the Government to progress these proposals as a matter of urgency."
While scale and technology have been driving fees down, regulation is increasing costs, he added.
The report also highlighted the impact of restricting superannuation competition in modern awards, as the fees in large employer (default) super funds are among the lowest at 83 basis points.
"Such employers are typically not restricted by modern awards and are free to select any superannuation fund, often via a competitive tender process - members are clearly benefiting from the highly competitive dynamics of this segment," the FSC stated.
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