THE GREAT RETIREMENT ROBBERY – The golden years will be nicer for some than for the majority:
For two decades the superannuation industry has extracted more than $700 billion in fees above what typical super funds charge overseas, equivalent to almost 40 per cent of the nation’s annual GDP, according to new analysis.
Super funds charged fees more than four times higher than similar funds in Canada, Europe and the US, with workers thousands of dollars worse off each year, the study says.“If members’ contributions between 1997 and 2016 had been invested in a passively managed fund with typical expenses and allocations, they would now be valued between $700bn and $800bn larger,” University of NSW economist Nicholas Morris said. The total pool of superannuation assets, $2.6 trillion in March, would now be more than $3.3 trillion.Declaring superannuation a “policy failure”, Professor Morris, a joint founder of the highly regarded Institute of Fiscal Studies in London, said high fees meant the retirement system in Australia had delivered income replacement rates that were barely above 40 per cent, compared with an average of 63 per cent across OECD countries.
The most interesting question arising is whether there is or has been any collusion between the funds to reap the rewards from keeping the fees artificially high without the benefit of any real competition.