This week’s National Reform Summit revealed a shocking figure that is undermining Australian’s efforts to fund themselves during retirement.
According to John Daley, chief executive of the Grattan Institute, fees associated with superannuation accounts are costing us $21 billion a year – that’s the equivalent of half the national age pension bill.
The Australian Financial Review reported that Mr Daley believes there is insufficient competition in the sector, meaning super funds can charge what they like in fees.
The Grattan Institute suggests a tender process that could save up to $5 billion in fees.
“That’s about a third of a per cent of GDP. There’s not a lot of other reforms we could look at that would deliver that kind of return,” he said.
Michael O’Neill, chief executive of National Seniors, says $21 billion in super fees is astonishing.
“Whether you are an industry fund or retail fund the message is pretty strong: it’s a retirement income, it needs not to be gouged by fees and charges,” he said.
Mr O’Neill is calling on both sides of parliament to work together and come up with policies that prevent superannuation funds from taking a large bite out of Australians’ nest eggs, and that the regulator may have to step in.
Independent researcher SuperRatings compared the average annual fee of non-profit super funds ($484) to other funds ($851) based on a $50,000 balance.
Delegates at the summit agreed that the purpose of superannuation – that is, providing sustainable retirement incomes – needs to be clarified, with Paul Howes from KPMG saying it should be written into law.
How much do you pay in super fees? Do you think they are excessive?