After reviewing its processes for managing multiple accounts, the country’s largest super fund will refund $70 million to members for excess fees charged.
Around 100,000 current and former members will receive an average of $650 each after a review of its processes for managing multiple accounts held by members.
This included administration fees and insurance costs deducted by the secondary accounts, as well as lost earnings on those amounts.
“The fund regularly identifies and combines multiple accounts held by a single member to help those members avoid extra fees,” the fund said in a media release on Friday morning.
“Following our review, we identified that our processes did not cover all instances of multiple member accounts. This should not have happened, and we apologise unreservedly to members.”
The fund said it was taking “appropriate remediation actions” and has self-reported the issue to the relevant regulators.
The impacted members – current and former – will be contacted in the coming months to inform them of the issues and actions being undertaken.
“AustralianSuper’s aim is to return these members to the financial position they would be in now if this hadn’t occurred,” the fund said.
“In addition, we have strengthened our processes around managing multiple accounts for all members to help ensure instances where a member has more than one account are identified, and appropriate actions are taken in a timely way.”
The cost will be paid from the fund’s Operation Risk Financial Reserve and the fund said it would not increase administration fees to cover the remediation.
In a separate statement, Super Consumers Australia called on all super funds to review processes for multiple accounts, pointing to the requirements in the SIS Act which required super funds to annually identify people with multiple accounts and consider whether those accounts to be merged.
The law can be enforced by ASIC or APRA and the consumer group called for the regulators to take transparent action where processes are not good enough.
SCA deputy director Rosie Thomas said paying extra fees and insurance premiums for more than one account adds up, citing Productivity Commission research that found unnecessary multiple accounts can leave someone over $50,000 worse off in retirement.
“It’s important we fix this problem across the super system, and getting funds to sort out intra-fund consolidation is the first step.” Thomas said.
“The laws to encourage super funds to get rid of multiple accounts within their own fund are a decade old. We’ve never seen any public statement or actions from the regulators on this issue. It is alarming that such a major player is only discovering issues now.”