RBA says our super fees are too high
Australia’s central bank has said our superannuation fees are too high, ranking us third in the developed world behind only Spain and Mexico.
The Reserve Bank of Australia has made a submission to the Federal Government’s financial system inquiry, arguing we need to cut the cost to consumers of our $1.8 trillion superannuation system, The Australian Financial Review reports today.
Many Australian fund managers’ fees are “considerably higher” than foreign-owned super funds, the RBA says, because our funds pursue active investment strategies without necessarily boosting returns.
As this story and others have shown, funds that simply track the stock market index often outperform the ones that are “actively” managed.
Some estimates even go so far as to say that management fees have taken up to 45% of Australians’ investment returns in recent years.
The other factor counting against Australian savers is our disengagement, the RBA says, partly because of the system’s complexity and the difficulty in comparing funds’ fees.
It also warned about self-managed super funds borrowing to invest and “the potential for superannuation funds to ‘search for yield’ in the current low interest rate environment.”
The RBA’s submission “has the potential to shake Australians out of their complacency about the heavy cost of the country’s compulsory saving system,” the AFR’s Tony Boyd argues.
“This is something [inquiry head David] Murray should analyse in depth.”
What do you think? Are our super fees sky-high? Should Australians pay more attention to their super fees?
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