Superannuation fees have continued to fall according to the latest Financial Services - Rice Warner Actuaries Superannuation Fees report which shows a clear downward trend since the study commenced in 2002.

 

According to the report, over the past decade, industry wide average fees have declined by 12 per cent from 137 basis points (bps) in 2002 to 120bps in 2011. Between 2010 and 2011, average fees have fallen by 5 per cent from 127bps to 120bps.

 

CEO of the Financial Services Council, John Brogden said it was a positive outcome for consumers, given that fees were continuing to decline despite turbulent markets and increasing regulatory costs.

 

Michael Rice, CEO of Rice Warner said there was a lot of misinformation about fee levels.

“There are different fee drivers – scale and technology are driving fees down. On the other hand, regulation is increasing costs.”

 

According to the Financial Services Council, the report reinforces the importance of proposals to introduce a product rationalisation mechanism for superannuation.

 

“At 210bps, legacy products have significantly higher than average fees. Allowing superannuation providers to rationalise these products would allow members to benefit from considerably lower fees.”

 

“This report puts beyond doubt the need to introduce a product rationalisation mechanism for superannuation. The government is standing in the way of members benefiting from fee reductions in contemporary products. We call on the government to progress these proposals as a matter of urgency.” Mr Brogden said.

 

The report also highlights the impact of restricting superannuation competition in Modern Awards. Fees in large employer (default) superannuation funds are amongst the lowest at 083bps. 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 in this segment.

 

“The current Productivity Commission inquiry into the selection of default superannuation funds under Modern Awards provides an opportunity to extend the benefits of competition to workplaces that are currently constrained by Modern Awards. This research shows that employees under Modern Awards cannot afford to miss this opportunity.”