The government's reforms to the super system will only reduce fees by 10 per cent, according to a new report.
The report, released by the Grattan Institute, argues that the average administration fee is too high, with Australians (excluding SMSFs) paying $5.9 billion to administer their accounts.
"Administration fees in choice and default superannuation are higher than they need to be for three main reasons. First, about 12 million superannuation accounts are not needed. Second, there are still too many funds. Third, many people are in funds that are inefficient or provide low-value services," said the report.
The average administration fee is also higher than it needs to be, with "lean single-sector products" charging well below the average for MySuper products, said the Grattan Institute.
A move away from active management and towards more passive management would also strip costs from default superannuation, the report said.
"Australia has many high-performing but lean funds. If other funds charged what they charge, account holders could get the same performance, but pay $4 billion a year less in administration and $2 billion less in investment management," he says.
"Policymakers can do much better. As the FSI review argues, policymakers must do more to prune out poor products and, unless efficiency improves markedly, create a market mechanism to push for strong performance," the report said.
The Financial Services Council (FSC) welcomed the release of the report, acknowledging that super fees are "higher than they should be".
FSC chief executive Sally Loane said her organisation has always supported an open market in the default superannuation system to drive competition.
"Both Grattan and David Murray’s Financial System Inquiry have proposed opening the default super system to competition − we encourage the Parliament to support reform in this sector," Ms Loane said.
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