Clipping the super ticket gets harder

Mike Taylor

Managing Editor/Publisher, Financial Newswire

16 December 2022

Clipping the ticket is not going to get any easier for those in the superannuation industry with the fees having dropped dramatically over the past five years and with the Australian Prudential Regulation Authority (APRA) suggesting they can drop further.

Releasing its latest Heatmaps analysis, APRA pointed to the rate of decline in total fees and costs since the heatmaps were introduced in 2019.

It said the reductions had primarily been driven by lower investment fees and transaction costs, suggesting RSE licensees had adopted more efficient ways to execute their investment strategy.

“APRA estimates that 8.1 million members (56% of member accounts) have experienced a drop in disclosed total fees and costs from the date of the 2021 Heatmap to the 2022 Heatmap. The total estimated savings for members is $210 million per annum” it said.

“For a representative member with a $50,000 account balance, total fees and costs have fallen from $523 per annum in the 2021 Heatmap to $488 per annum for the median product and now sit below 1% of asset value.”

“Administration fees and costs have declined for most MySuper products and are now $143 per annum for a representative member with a $50,000 account balance in the median product, down from $160 per annum in the 2021 Heatmap.”

“APRA expects RSE licensees to continue to prioritise delivering reduced fees and costs, particularly for those with more expensive MySuper products. It is important that RSE licensees that offer MySuper products with high fees can demonstrate these products deliver robust member outcomes. If RSE licensees are unable to do so then they must consider alternatives which may include transferring members to better performing, lower cost products.”

“Median total fees and costs metrics have fallen in each of the past four years across all the account balances captured in the Heatmap, with more significant falls in percentage terms for lower account balances.”