01.Australia's costly super
Archaic paper-based operations and fund managers acting in their own interests are responsible for Australia’s superannuation funds being some of the most expensive in the OECD, according to the Treasury submission to the Financial System Inquiry.
In 2013 the average super fund charged $726 in fees. Only Spain, Hungary, Mexico and the Czech Republic have higher super fund operating costs than Australia’s, prompting the Treasury to call for improved technical efficiency to reduce fees.
The high costs of Australia’s superannuation funds may be due to manual office work and legacy administration systems. And the separation of superannuation fund ownership from the management can lead to fund managers putting their own interests ahead of their members', leading to irregular information being provided to disengaged members. However, Treasury said the recent policy reforms such as the introduction of MySuper will drive efficiency by placing the onus on trustees to manage funds in the members' best interests and provide better information to members.
Read about CHOICE's submission to the Financial System Inquiry.