The Commonwealth Bank has blamed onerous product rationalisation requirements for a letter which outraged customers of its ‘legacy’ Life Superannuation Mastertrust last month.
The letter informed members of the Life Superannuation Mastertrust (Life SM) that they would be charged 0.59 per cent of their balance, up to $750, for a successor fund transfer into Colonial First State Employer Super.
An employer sponsor of Life SM since 1993, Zsusanna Kaufmann of Gregg & Kaufmann Real Estate in Mosman, called CBA’s suggestion “audacious and impertinent” and has just switched her nine employees into industry fund CARE Super, incurring an exit fee of $49 apiece from the bank, and freeing her staff of any obligation to pay the successor fund transfer charge.
Life SM is a relic of the Colonial Mutual Life Assurance Society, offering two investment options and no online account access. It has long been closed to new members and was in ‘run-off’ mode. Its successor fund CFS Employer Super has modern features and, CBA claimed in the letter, lower fees and insurance premiums.
However closing one and moving members into another does not come cheap in an industry still waiting for product rationalisation legislation. The spokesperson said the 0.59 per cent or $750 charge was only a “partial contribution to the administration costs of switching to a more contemporary product”. The costs are incurred by tasks such as scraping data from old computer systems and, under the rules as they stand, seeking permission from every customer before the transfer can take place. Life SM’s letter gave its members until March 25 to decide if they wanted to join the successor fund transfer, which is now underway and due for completion on May 4.
However any attempt to explain the $750 impost was lost on Zsusanna Kaufmann, who questioned how it could cost that much to move money “from one pocket to another pocket” within the same group.
“I find it so insulting when my husband and I have sacrificed over the past 18 months to retain all our staff and preserve their entitlements, for [CBA] to so casually come in now and try to rob their pockets of $750, because of a decision that’s entirely the bank’s own.”
Coincidentally another real estate agency sponsor of Life SM, Dowling Real Estate of Toronto near Newcastle, was reported in the Morisset Lakes Mail last week as reacting in a similar fashion to the letter. The agency’s Elaine Pilcher was quoted as saying: “I’ve compared the list of benefits from one fund to the other, and I would have had no problem just transferring…But it’s not worth what they want to charge us.”