Super funds’ competitive fees focus

With little more than a month to go to the end of the financial year and with the Australian Prudential Regulation Authority (APRA) due to report the superannuation performance test outcome in August, superannuation funds have begun reviewing fees.

Colonial First State was amongst the first to announce fee reductions in April, and major industry fund, Aware Super, yesterday announced it is cutting its administration fees for retirement income and retirement transition members along with the maximum annual administration fee on a retirement account.

While the Aware Super announcement covered the retirement cohort of its membership, the CFS April announcement was broader, covering FirstWrap Plus and FirstCoice Employer Super.

The messaging accompanying the Aware Super move was that the fund’s retired members “will now pay some of the most competitive fees in the market”.

“From 1 June, Aware Super will reduce the annual administration fee for retirement income and retirement transition members from 0.23% to 0.17% of a member’s balance. It has also cut the maximum annual administration fee on a retirement account from $1,500 to $1,300,” the announcement said.

The Aware announcement is significant because it comes against the background of Treasury last year canvassing whether the performance test should be expanded to other superannuation products such as externally-managed, single sector and retirement products”.

The Treasury discussion paper noted that retired members in the drawdown phase make up around $400 billion in assets across 1.2-million-member accounts.

Aware Super Group Executive, Member Growth, Steve Travis said the fund was determined to keep fees low and deliver the benefits of the fund’s increasing size and efficiency gains to its members.

“We’re now the third biggest superannuation fund in Australia and we invest $190 billion on behalf of our 1.2 million members. We want to share the benefit of our size and scale by passing fee reductions on to our members,” he said. “In the first year alone, this cut will save our retired members a collective $18 million in fees.”