A combination of scale and forecast cost savings of running member administration and financial planning inhouse enabled the $12 billion Sunsuper to make a recent fee cut across pension accounts. The move echoes BUSS(Q)’s move two years ago to abolish all fees for allocated pensioners, although that has failed to attract as many of the high account balances as was hoped. In March, Sunsuper announced a 0.1 per cent reduction in fees, to 0.25 per cent, for the first $300,000 of pension accounts.
For the next $400,000, a 0.15 per cent fee will now be charged, and no fees would apply to balances larger than $700,000. Tony Lally, chief executive officer of Sunsuper, said the fee cuts were made possible because of the fund’s scale and savings from not outsourcing services to members. “This is the first tangible benefit we’ve passed onto members since the acquisition of Citistreet [
Australia],” Lally said. “Smaller funds can’t afford these benefits to members.
They outsource services, and they pay for it.” He said bringing member administration in-house had lowered overheads. For example, “you don’t need two CEOs,” he said. Lally will not reduce the weekly $1 administration charge for pre-retirement accounts – among the lowest in the industry – saying cost savings would be re-invested in member services. “We wanted to offer them additional services before the pension phase, like financial planning and investment seminars.
In retirement, the benefits we can offer them are lower fees, and this is the first manifestation of that.” Since the average pension account in Sunsuper is more than $300,000, the fee cut affects most of the fund’s pensioners. Meanwhile, BUSS(Q)’s plan to build scale by introducing no-fee pensions had achieved “minimal impact” since it began in July 2007, according to David O’Sullivan, chief executive officer. The fund’s pension accounts had roughly doubled to comprise $50 million of the fund’s $1.4 billion in assets.