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Australians paying too much in superannuation fees

It has been revealed that Australian superannuation fees are amongst the highest in the world. Many leading economists, including Treasury director David Gruen, are making a call for fees to be reduced, in line with national interests and an aging population.

Cumulatively, superannuation fees cost Australians approximately $20 million per annum. This represents about 1% of GDP and equates to an average of $726 per person each year. Our superannuation fees are three times higher than their British equivalents.

Recent research, conducted by the Grattan Institute, estimates that by halving super fees, funds would be, on average, 15% bigger by the time they reach pension phase.

According to the Grattan Institute, an indication that the Australian superannuation industry is insufficiently competitive lies in the fact that there has been no reduction in fees as superannuation savings have soared. Theoretically, it should not cost significantly more to run a fund managing $1 billion than it should to run a fund managing $100 million.

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What to consider when consolidating your super

August 27, 2020

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds’ policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready: