Fees levied to pay for financial advice represent only a small proportion of the approximately $8.5 billion in fees levied by Australia’s major superannuation funds.
That is the bottom line of evidence delivered to the Senate Economics Legislation Commission review of the Your Future, Your Super legislation with Super Consumers Australia (SCA) confirming that the largest proportion of fees levied by superannuation funds went towards administration and investment.
Answering questions on notice, SCA confirmed earlier analysis of where financial planning stands in terms of superannuation fund cost structures.
What is more, the SCA answer suggested that Australian Prudential Regulation Authority (APRA) data probably failed to fully reveal the level of investment fees.
“For the financial year ending June 2020, approximately $3.6 billion in administration fees were paid to large APRA regulated funds. By comparison $2.9 billion was paid in investment fees and total fees paid equalled $8.5 billion,” the SCA told the committee.
“The remaining fees paid consisted of insurance fees, advice fees and activity fees. However, we note that this APRA data significantly under-reports investment fees as highlighted by the Productivity Commission,” it said.
“The median disclosed administration fee for a MySuper product member with a representative balance of $50,000 in December 2020 is 0.325%. The median investment fee was found to be 0.725%.”