Super fees falling

Despite upward pressure from regulation, superannuation fees dropped 5 per cent between 2010 and 2011 to 120 basis points.

According to the latest Financial Services Council (FSC)/Rice Warner superannuation fees report, the decrease is part of a continuing trend, with super fees falling since the report's inception in 2002 by a total of 12 per cent to 2011.

Rice Warner chief executive Michael Rice said the industry was awash with misinformation about fees and although recent regulation had pushed costs up, scale and technology were driving them back down.

Legacy products charged higher fees at 210 basis points, which showed the need to introduce a product rationalisation mechanism for superannuation, according to FSC chief executive John Brogden. 

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"The Government is standing in the way of members benefiting from fee reductions in contemporary products," he said.

Fees were lowest for larger default superannuation funds that were not restricted by modern awards and were often chosen through a tender process. Fees averaged 83 basis points.

Brogden said it showed the flaws in the system and gave the Productivity Commission - which is currently consulting with industry on the assessment of default funds on modern awards - an opportunity to increase competition for all super players.

"The current Productivity Commission inquiry into the selection of default superannuation funds under modern awards provides an opportunity to extend the benefits of competition to workplaces that are currently constrained by modern awards. This research shows that employees under modern awards cannot afford to miss this opportunity," he said.