The major banks raked in nearly $9 billion in fees from Australian workers’ super nest eggs in 2016, new research by Rainmaker Information reveals.
In return, the bank-owned super funds delivered returns of 2 per cent less per annum when compared to industry super funds over 10 years. For an average income earner, this under-performance, if continued, could cost $200,000 in retirement savings over their lifetime .
The report, commissioned by Industry Super Australia, estimates that the superannuation industry drew $31 billion in fees in 2016, with:
- 91% ($28 billion) of all fee revenue being collected by for-profit wealth management groups; and
- Only 9% ($2.8 billion) was paid to not-for-profit trustee offices, including for associated administration operations.
The report describes how the vertically integrated wealth management machines of the banks generate fees through a number of complex fee arrangements, including platform superannuation, funds management, financial advice, group insurance and asset consultancy.
"Super cannot be a honey pot for Australia's scandal prone banks", said Industry Super Australia chief executive David Whiteley.
"It’s time the major banks clearly disclose the profits they generate from compulsory super to their customers, shareholders and the general public.”
"The government and regulator need to find out if the bank-owned super funds are eroding workers’ super savings by generating profits for the parent bank,” he said.
Whiteley said that the banks and their super funds were running a major lobbying campaign to change superannuation rules to increase their market share.
“The banks are putting pressure on federal politicians to dismantle the model of not-for-profit superannuation funds and redesign the super system to suit their profit-making business models,” he said.
A recent Essential poll commissioned by Industry Super found:
- Only 31% trust that the banks will ensure the superannuation system works in their best interest. This compares to 38% for the Federal Government; 61% for the Fair Work Commission; and 69% for Industry Super Funds.
- 70% believe all super funds should be not-for-profit with all returns to members rather than split with shareholders; just 6% disagree.
The Rainmaker Information report Superannuation Industry Revenue is here.
Industry Super Australia provides policy, research and advocacy on behalf of 15 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of five million Australians.
Industry Super Australia Pty Ltd ABN 72 158 563 270, Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514. Past performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a fund.
 Source: SuperRatings' April 2017 Fund Crediting Rate Survey
 ASIC Money Smart calculator - start age 27, retire age 67, income $80,000 starting balance zero. Balance with investment returns of 4.5% = $442,402. Balance with investment returns of 6.5% = $663,270. Difference= $220,868 (Current dollars CPI deflated)