Commissions only part of cost equation

Chris Butler

A key superannuation research house has released a new analysis which concludes that removing commissions from current superannuation products will not succeed in reducing average super fees below the Federal Government's proposed target of 1 per cent.

The Heron Partnership analysis covered 117 major retail and industry superannuation products and found that the current average fee was 1.27 per cent for an account balance of $50,000, 1.35 per cent for a balance of $25,000 and 1.22 per cent for a balance of $100,000.

Importantly, these fees excluded any fees paid for financial advice, it said.

Commenting on the analysis, Heron Partnership managing director Chris Butler said superannuation funds typically charged administration and investment fees, which varied from fund to fund depending on an individual's fund balance and investment structure.

"Of the 117 superannuation products analysed based on an account balance of $50,000, 68 funds would need to restructure their fees to be at 1 per cent or less," he said.

Butler said as a result of the various fee structures, there was a considerable difference between the retirement outcomes of the various products.

Further, he said only looking at costs or past investment returns would not be sufficient to select a super fund suitable for a person for up to 40 or more years.

"We therefore recommend that individuals seek advice from a financial planner to assist them in selecting the product that best suits their requirements," Butler said.