Commissions to impact retail funds says ratings agency

Written on the 12 May 2009

 

MODELLING by an independent ratings agency has shown that members of industry super funds could be more than $80,000 better off in retirement than workers in retail funds, due to the impact of sales commissions and fees over a 40-year period.
But according to Andrew McLauchlan, managing director of McLauchlan & Partners, the issue has become a ‘storm in a tea up’ with the majority of financial advisers disclosing fees up front.
“Whilst this is seen as the biggest issue for super account holders and the media, for the majority of leading financial planners this will have minimal impact due to those advisers moving away from the ’hidden’ trailing commissions paid by various fund managers,” says McLauchlan.
A joint submission by Industry Super Network (ISN) and the Australian Institute of Superannuation Trustees (AIST) recommends sales commissions on super contributions be abolished in an effort to improve the adequacy of retirement savings before increasing contribution levels.
The submission has been made to the Henry Review on Australia’s Future Tax System.
“It is evident that high fees and sales commissions can reduce workers’ final super payout,” says David Whiteley, executive manager of the ISN.
“Before employers or employees are required to increase contributions, the efficiency of the super system needs to be examined, particularly the fees and commissions paid.
The dramatic compounding effect of the difference in fees over time means it is critically important for super fund members to keep an eye on the cost of their fund, especially fees and commissions paid from their super account.”
Whiteley says new modeling shows that due to low average fees and no commissions, industry super members could retire with an additional 20 per cent more super compared to their retail fund counterparts.
“With statements about to be mailed out to many super fund members, now is the right time for people to do their homework and check what they are actually paying in terms of fees,” says Whiteley.
Modeling by SuperRatings used average existing fee levels and projections over 40 years, to give an indication of the potential impact of fee differentials between the two sectors. The review covered 34 funds representing more than eight million members.

Latest News

BELLAMY'S FINDS EXPORTING BABY FORMULA INTO CHINA IS NO CHILD'S PLAY

BELLAMY'S (ASX: BAL) shares have suffered a 40 per cent drop in value today after the company hit a regulatory...

BRISBANE WATCH BRAND ADINA AIMS FOR ICONIC

ADINA watches is at a turning point in its history, 45 years after being founded by Robert 'Bob' Menzies i...

WHY YOU SHOULD CARE FOR YOUR BODY AS MUCH AS YOUR BUSINESS

ENTREPRENEURSHIP is a busy business. It can be all-consuming, but it is important not to neglect your health Y...

BULLETS BACK IN THE BUSINESS COMMUNITY

ALTHOUGH new to the current south-east Queensland sporting landscape, the Brisbane Bullets have a rich basketball ...

Related News

JB HI-FI IS THE GOOD GUY IN $870 MILLION ACQUISITION

ELECTRONICS giant JB Hi-Fi has formally completed its $870 million acquisition of home appliance chain The Good Gu...

ACCC ACTS AGAINST MERITON'S RIGGED REVIEWS

MERITON Property Services is under fire from Australia's main consumer watchdog, after it allegedly engaged in mi...

ACCC FIRES WARNING SHOT TO IVF PROVIDERS

IVF clinics have been put on notice by consumer watchdog, the Australian Competition and Consumer Commission (ACCC...

BIG W CEO QUITS AFTER 11 MONTHS

SALLY MacDonald has resigned as chief executive of BIG W ending her tenure at the helm of the struggling discount ...

Contact us

Email News Update Sign Up Contact Details

Subscribe to our mailing list

* indicates required
Email Format

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter