Lost accounts a bonanza for super funds
Almost one in two working Australians have lost superannuation accounts while super funds have claimed more than $100 million in fees from lost and inactive members accounts last fiscal year.
According to research house SuperRatings, average fees of 1.85% were charged by eligible rollover funds (ERFs) despite lower costs through members rarely contacting the fund or making transactions.
SuperRatings managing director, Jeff Bresnahan, said that “these levels of fees are absolutely excessive given the amount of work involved in managing these accounts”.
Trustees could also be ignoring their fiduciary duty to act in an investor’s best interests by nominating related ERFs to accept lost and inactive member accounts.
“There’s an element of taking advantage of the lack of knowledge that members are even in these funds”, Mr Bresnahan said.
The Australian Securities and Investments Commission last reviewed the ERF sector in 2003 and found that fee disclosure was not always clear or effective and, in some cases, potentially misleading.
A spokesman for the Australian Prudential Regulation Authority, Andrew McCutcheon, said it was aware of issues regarding ERFs including conflicts of interest, unsuitable investment strategies, and varying approaches to consolidating accounts. These issues would be a superannuation priority for the regulation authority over the next six months, Mr McCutcheon said.
