By Ruth Williams
Wed April 29 2009
FEES, commissions, red tape and many other issues concerning Australia's $1.1 trillion superannuation industry will come under scrutiny in a review of the sector, as the Government works to shore up deteriorating confidence in the 20-year-old system.
The review, first indicated almost a year ago, comes in the wake of Storm Financial group's collapse, growing scrutiny of fees and charges levied on the nation's 10 million super fund members, and rising losses.
Although SuperRatings data showed an average March fund gain of 2.24 per cent, returns over the year to March are down 17.35 per cent.
There have been repeated calls for more competitive fees by Superannuation Minister Nick Sherry, who has previously questioned why they have not fallen as assets have grown, instead hovering at about 1.25 per cent of funds under management.
Sections of the super industry have also disagreed on many issues, including how super fund performance should be measured and reported, and which sector - retail or industry - offers the best value for money.
But despite disagreements, eight prominent groups connected to the sector endorsed the review. They signed a communique acknowledging that public confidence was "critical", and agreeing that it was "prudent that the current operational features of our superannuation system be examined".
Senator Sherry said the review would look at the "structure, operation and efficiency" of the system. But he did not provide further details - including when and how it would report, its terms of reference and even who would conduct it.
Senator Sherry said the Government had "no predetermined views" on the review's outcome, rejecting reports that Government ministers had made an "in-principle decision" to ban financial advisers from charging commissions on compulsory super advice - a move that would have huge ramifications for the financial planning industry.
The Financial Planning Association was among the bodies that endorsed the review. It has a long wish-list of issues it wants tackled, such as what it describes as "crazy" levels of red tape involved in giving clients simple advice on compulsory super.
Industry Funds Management, which also signed the communique, has previously called for action on charges.
The Opposition attacked the Government for announcing "yet another review".
