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.