Big 4 Banks Cash In On Super Fees

According to recent research by Rainmaker, Australia’s four big banks collect one third of all fees paid to super funds totalling nearly ten billion dollars.

The study commissioned by Industry Super Australia finds that the superannuation industry draws an estimated $30 billion in fees in 2014/15, with a 33% share of that going to Commonwealth Bank, Westpac, NAB and ANZ collectively. This level of fees is disproportionate to the funds under management.

When it comes to fees, Canstar’s recent research of 67 superannuation products, from both industry and retail sectors, has found that it does pay to shop around. The minimum, maximum and average fees across the 67 superannuation products included in its 2015 Star Ratings were as follows:

Super Balance ($) Average Fees ($) Min. Fees ($) Max. Fees ($)
25,000 257 105 732
80,000 826 360 2,285
140,000 1,437 630 3,836
160,000 1,640 720 4,384
500,000 4,906 2,250 13,700
Fees include Administration Fees and Indirect Cost Ratio (including Investment Fee, Performance Fee and other indirect costs). Fees are calculated based on the average super balance specified, based on funds assessed for Canstar Superannuation Star Ratings 2015.

“Fees are being generated a number of ways by the vertically-integrated wealth management arms of the banks, including platform superannuation, funds management, financial advice, group insurance and asset consultancy,” said David Whiteley, Chief Executive of Industry Super Australia.

“However these services are carried out within the banks’ conglomerates with very little or no transparency. This should be cause for concern for fund members and an area ripe for disclosure reforms by law makers and regulatory authorities.

“Compulsory superannuation is a foundation of our retirement income system, it should never be a honey pot for the big four banks.”

Retail Super Funds Becoming More Popular

Despite the cost, retail super funds are increasing in popularity. A separate recent survey by Roy Morgan Research found that while industry superannuation funds continue to be ahead of retail funds for satisfaction with financial performance, it’s the narrowest of margins. Industry funds had a satisfaction rating of 59.6% in the six months to August, only just ahead of retail funds with 58.9%.

Significantly, retail funds have a reported higher satisfaction rating among the all-important high net wealth sector ($700,000+), where retail funds score 81.1% compared to 77.6% for industry funds.

Research your options

Canstar’s Superannuation Star Ratings report analyses the fees and services offered by 67 public-offer superannuation funds, at the time of writing, in Australia.

If you’re comparing Superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology that matches the age group you selected.

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