Overall fees for the superannuation industry as a percentage of assets averaged 1.20 per cent for the 2011 financial year, a fall from 1.27 per cent for 2010.

The information is contained in a Rice Warner report on superannuation commissioned earlier this year by the Financial Services Council.

While the report was delivered to the FSC in August, Rice Warner is now making it publicly available.

Rice Warner describes the fall in fees as “modest” and says that while fund consolidation has resulted in increased scale and lower fees across the industry, “other offsetting factors” have prevented fees from falling as far as they could.

Four fee factors

Factors working against a greater decrease in fees include:

  1. A shift to assets with higher cost structures, such as direct infrastructure investment, private equity and hedge funds.
  2. A “huge growth” in member-engagement services.
  3. “Heavy investment” in administration platforms.
  4. Continued inefficiencies in collecting and allocating contributions, largely as a result of poor practices by employers in meeting superannuation guarantee obligations.
The report also contains information on market segments and shows that the greatest fall in fees was the in the area of personal superannuation offered by the retail sector (20 basis points), followed by small-corporate-super master trusts (16 bps) and industry funds (13 bps).

Over a 10-year period, the report says overall fees have fallen from 1.37 per cent, representing a 12-per-cent decrease.

To read the report, click here.


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