AIST welcomes fee cuts but concerned about members still in underperforming funds

The Australian Institute of Superannuation Trustees (AIST) has welcomed the reduction in fees and costs for superannuation fund members over the last year as highlighted in the latest MySuper Heatmap released by the Australian Prudential Regulation Authority (APRA).

AIST CEO Eva Scheerlinck said she was pleased to see 8.1 million members representing 56% of all accounts had saved $210 million in fees and costs since the 2021 Heatmap was published but that fees were only part of the picture.

“There has been downward pressure on fees for some time, led by the profit-to-member funds which return profit to members and do not pay external shareholders,” she said.

Ms Scheerlinck said that although it was encouraging to see more funds reduce their fees, what ultimately mattered was the net return to members.

“Low fees are not enough - your fund must also deliver a competitive net return.  This is demonstrated by the fact that nine of the top 10 funds by net performance over the last eight years are profit-to-member funds,” she said.

Although MySuper products with “significantly poor” investment performance had 350,000 fewer members than in 2021, she was concerned that these underperforming products retained about 800,000 members’ accounts.

“Given that only three in 10 members in underperforming funds have moved, it underlines the fact that more needs to be done about underperforming funds at a system level. We have always stated that the onus to act should not be on the individual member but on the design of the system settings,” Ms Scheerlinck said.

“As the peak body for profit-to-member funds, AIST continues to call for annual performance testing to be extended to all Choice accumulation products, rather than just MySuper products.”

The Heatmap evaluates the performance of all MySuper products based on investment returns, fees and costs and long-term sustainability of member outcomes and includes each product’s result under the Annual Performance Test.

 

Media inquiries: Garry West, AIST Senior Manager, Media and Communications: gwest@aist.asn.au|+ 0428 892 155

AIST is the peak body for the $1.7 trillion profit-to-member superannuation sector, which includes industry, corporate and public-sector funds