Super Size Fees
In 6 days time 4.8 million Australian employees (out of a workforce of 10 million) will get the opportunity to switch superannuation from their current fund to a fund of their choice. Whether they end up better or worse remains to be seen. A lot of larger company funds have offered good value to the average employee because of cheap death cover and scale advantages of low investment management and administration fees (some of which may have been paid by the company rather than taken out of members contributions). Some companies have also paid higher contributions than the 9% ‘Super Guarantee Contribution’. With fragmentation of company funds likely as healthy and high-income employees may move out to other arrangements, many of these scale benefits could be diluted.
There is however no doubt that choice and greater competition will provide different service and fee level offerings, even enticing Richard Branson with Virgin Super to enter the market. There are no guarantees that current fee levels offered by any fund will be maintained in future and shifting money usually costs something. All we can say is 'Get Educated' and 'Handle with Care!' before you pull the rip cord.
You can find out more about Super Choice from the Australian Government website (which wasn’t working last time we checked!) at : http://www.superchoice.gov.au/
...from the Australian Taxation Office website at: http://www.ato.gov.au/pathway.asp?pc=001/007/118
...and from the Australian Consumers Association at: http://www.choice.com.au/viewArticle.aspx?id=104765&catId=100375&tid=100008&p=1
FinDem has added a Miscellaneous Chart in Research Centre based on December 2004 average fees from APRA superannuation statistics, expressed as a percentage of Contributions plus Investment Earnings. But don't rely on this to guide your own position as it is skewed by the relative dollar levels of contributions and earnings of each fund type.
Posted Saturday, 25 June 2005
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