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Superannuation fees set to fall in Government super review

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The Federal Minister for Superannuation and Corporate Law Nick Sherry thinks fees charged by superannuation funds are too high and he wants to “renovate” Australia’s compulsory super system.

The Federal Minister for Superannuation and Corporate Law Nick Sherry thinks fees charged by superannuation funds are too high and he wants to “renovate” Australia’s compulsory super system.

According to estimates from Treasury, the average cost of Australia’s $1.1 trillion super system (including fees for financial advice, product distribution and other charges) is 1.25% of funds under management. “My considered view? That’s too expensive,” Sherry told The Australian Financial Review.

“Hence the need to go through every sector and analyse what the issues are and see where we can do a better job of getting those fees and charges down.”

Sherry wants to examine the way commission deals with financial planners are structured, look at ideas for improving competition in the superannuation sector and improve disclosure requirements to protect consumers.

The first target of the review is the problem of Australia 6.1 million “lost” super accounts, which hold around $11.9 billion in assets. Super experts and consumer groups have long complained the fees on these accounts – which average around 3%, more than double the average fees charged on super accounts – are excessive.

Jeff Bresnahan, the managing director of super research firm SuperRatings, welcomes Sherry’s focus on fees and charges and says his sector-by-sector approach will help target problem areas. “Anything that helps to maximise Australians’ super retirement savings is a good thing.”

He’s particularly pleased with the focus on lost super accounts. “That area does require urgent attention as there is a lot of leakage of fees and the lowest level of knowledge amongst consumers. That’s a great place to start.”

 

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