Banks rake in super cash

Wealth funds pocket $12 bil­lion on fees paid by work­ers

Sunday Tasmanian - - News - AN­NIKA SMETHURST

AUS­TRALIA’S big bank­ing groups pock­eted more than $12 bil­lion of the $31 bil­lion in su­per­an­nu­a­tion fees paid by Aus­tralian work­ers last year, new data shows.

An ex­clu­sive re­port by super fund re­search body Rain­maker found re­tail funds, which are usu­ally run by banks or in­vest­ment com­pa­nies, con­trolled one third of the funds pool but re­ceived 50 per cent of fees. Rain­maker es­ti­mated that Aus­tralia’s ma­jor bank­ing groups, in­clud­ing the big four banks, Mac­quarie Group and AMP, re­ceived more than $12.3 bil­lion in fees from re­tire­ment funds last year.

Com­mon­wealth Bank, ANZ, West­pac Bank and NAB col­lected $8.7 bil­lion in fees.

Union and em­ployer­backed in­dus­try funds, which man­age about 42 per cent of the super pool, at­tracted about 42 per cent of fees.

Self-man­aged super funds, which con­trol about a third of funds un­der man­age­ment, re- ceived about 7 per cent of fees.

The re­port found that the su­per­an­nu­a­tion in­dus­try drew a to­tal of $31 bil­lion in fees from Aus­tralian work­ers in 2016 with more than 90 per cent col­lected by for-profit wealth man­age­ment groups.

The In­dus­try Super-com­mis­sioned re­port said there was no re­la­tion­ship be­tween fees and re­turns. It said bankowned super funds “con­sis­tently un­der­per­formed” not­for-profit funds by 2 per cent a year over 10 years. “The high share of to­tal su­per­an­nu­a­tion in­dus­try fees be­ing paid into the re­tail seg­ment, and bank­ing groups and AMP in par­tic­u­lar, is sig­nif­i­cant be­cause of the rel­a­tive gap in in­vest­ment out­comes de­liv­ered to fund mem­bers over the longer term in their re­spec­tive work­place in­vest­ment op­tions,” the re­port said.

In­dus­try Super Aus­tralia chief ex­ec­u­tive David White­ley called for greater trans- parency in the sec­tor, ar­gu­ing that “com­pul­sory su­per­an­nu­a­tion should not be a honey pot for the banks”.

“This is a com­pul­sory sys­tem, re­search tells us that peo­ple over­whelm­ingly think it should be not-for-profit, but this re­port in­di­cates a hugely dis­pro­por­tion­ate amount of fees are go­ing to the ma­jor banks,” he said.

“Banks should be dis­clos­ing the prof­its they are gen­er­at­ing from com­pul­sory super.”

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mpul­sory su­per­an­nu­a­tion should not be a honey pot for the banks. DAVID WHITE­LEY, IN­DUS­TRY SUPER AUS­TRALIA

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