Superannuation fees in Australia are comparatively low on a global scale and could be even lower with the right policy settings the Financial Services Council said today.
John Brogden, CEO of the FSC said: “MySuper has set a new low benchmark for superannuation fees.”
“At 0.85 per cent, MySuper fees are competitive on a comparative international basis and could be further reduced if the right policy settings are in place.”
The FSC has recommended the Financial System Inquiry considers policy options to lower fees. These include allowing all MySuper products to compete for default superannuation and for regulatory reform to allow superannuation funds, life insurers and management investment schemes to rationalise legacy products.
“We are deeply concerned that some policy settings are generating immediate costs without any benefits to consumers,” Mr Brogden said.
“It is critical that the Murray Review considers an open, competitive market for MySuper products,” Mr Brogden said.
“More competition and product rationalisation through the removal of legacy products are two areas we have identified which can further reduce superfund fees.”
The FSC’s submission also refutes claims that Chile’s superannuation system is the benchmark for low superannuation fees.
New research for the FSC by ChantWest shows MySuper fees compare favourably with the private AFP pension system in Chile.
It shows the average total MySuper fee of 0.85 per cent was lower than the Chilean default fee of 0.92 per cent.
“Fees for Australia’s superannuation funds are extremely competitive,” Mr Brogden said.
“Superannuation funds in Australia have returned an average of eight per cent since superannuation was introduced over twenty years ago,” Mr Brogden said.
“This is due to investment in a range of growth assets such as equities and managed funds compared to jurisdictions such as Chile where superannuation fund investment is dominated by investment in fixed income assets.”
