Australians will get a boost in retirement savings under super reforms
Andrew Bragg
Average working Australians would have thousands of dollars more in their retirement savings if bigger superannuation funds faced stronger competitive tensions, the Financial Services Council said yesterday.
A new report released in the FSC’s submission to the Senate Economics Inquiry into the Superannuation Legislation Amendment (Trustee Governance) Bill 2015 shows that increasing scale in super through mergers and raising competitive tensions would reduce fees.
Andrew Bragg, Acting CEO of the FSC said: “On a day of reform discussion in Canberra, the new report highlights there is still more work to do on superannuation fees.”
“Twenty years after the introduction of super, we want to be saying that superannuation is meeting its purpose of providing most Australians with an adequate retirement and is reducing pressure on the public purse.”
“Superannuation is good, but it could be better,” Mr Bragg said.
The research by Rice Warner for the FSC demonstrates that larger super funds with a minimum fund size of $5 billion would result in an average of 0.95% in fees ̶ 0.15% less than the current average of 1.10%.
Mr Bragg said average industry fees could fall by as much as 0.25%, to 0.85% if the minimum size of a superannuation fund was $20 billion.
Rice Warner calculated that the average 20 year old woman who is a member of a small, inefficient fund managing less than $1 billion could be $55 000 better off at retirement if their fund merged with a larger, more efficient fund.
“Fees have been reduced with the introduction of the new MySuper default funds, but Australians will be much better off in retirement with a more competitive superannuation system,” Mr Bragg said.
“More reform is needed for super to meet its purpose. If we get the market structure right, super can alleviate increasing pension and aging costs through higher retirement savings,” Mr Bragg said.
“The legislation to improve superannuation governance introduced to Parliament on 16 September is a step in the right direction,” Mr Bragg said.
