Australians are being stung by high superannuation fees, paying well above the OECD median expense ratio, according to Vanguard.
Discussing a Grattan Institute report titled Super sting: how to stop Australians paying too much for superannuation, Vanguard's principal and head of market strategy and communications, Robin Bowerman, said Australians are paying too much in super fees, which will make it harder for them to save for retirement.
“High fees naturally reduce account balances, with the Grattan report claiming that a 45-year-old in 2010 on median earnings will have his or her super balance reduced at retirement by more than $80,000 (or 20 per cent)," Mr Bowerman said.
“The younger you are, the worse the story gets, thanks to the compounding effect over time. A 25-year-old entering the workforce in 2010 will see their account reduced by more than $250,000."
Mr Bowerman said the report also claimed individual account holder fees have gone from $550 in 2004 to $820 in 2013.
“That would be less of a problem if the funds were earning higher returns to compensate for higher costs,” he said, adding that high-fee funds “destroy returns” for members and on average, high-fee funds do not generate higher gross returns.
“A critical issue is the level of understanding among fund members of the fees charged: when fees are quoted at, say, 1 to 2 per cent, that may not seem overly high or alarming,” Mr Bowerman said, “but the real cost may be as high as 50 per cent of the return earned when looked at over a lifetime of savings.”
SUBSCRIBE TO THE IFA DAILY BULLETIN
24 Nov 2017Increased ASIC licensing fees revealedBy Tim Stewart
24 Nov 2017FPA announces 2017 award winnersBy Staff Reporter
23 Nov 2017Fintech progress can't be fought: FPABy Killian Plastow
24 Nov 2017‘Winter is coming’ for PI insurance marketBy Aleks Vickovich
23 Nov 2017NowInfinity appoints new national sales directorBy Staff Reporter
23 Nov 2017Centrepoint creates new 'high performer' networkBy Jessica Yun
- view all