Removing commissions from current superannuation products will not be enough to bring average fees below the government's 1 per cent target, according to research by superannuation consultancy The Heron Partnership.
Heron researched 117 major retail and industry superannuation products and found that even without fees paid for financial advice, the current average fee was well above 1 per cent across a range of account balances.
For example, the current average fee for an account balance of $50,000 was 1.27 per cent, for $25,000 it was 1.35 per cent and for $100,000 it was 1.22 per cent.
Superannuation funds would need to restructure their fees, including administration and investment fees, to satisfy the government target, The Heron Partnership's managing director Chris Butler said.
"Of the 117 superannuation products analysed, based on an account balance of $50,000, 68 would need to restructure their fees to be at 1 per cent or less," he said.
"A lot of work therefore needs to be done if the government's target is to be met."
There is a considerable difference between the retirement outcomes of the various products as a result of the varying fee structures, Butler said.
"For example, if you take a membership period of 40 years ... the lowest cost industry fund and the lowest cost retail fund produce retirement benefits at age 65 some 15 per cent greater than the average fund in their classification," he said.
"We therefore recommend that individuals seek advice from a financial planner to assist them select the product that best suits their requirements."
Heron's research included 65 industry funds/divisions and 52 retail products.
