The ASX announcement by parent-company Commonwealth Bank confirmed that the fee cuts would benefit over 500,000 members with around $68 million in annual fee reductions.
The members that benefit are those across its FirstChoice Wholesale, Employer Super and FirstWrap Plus platforms and will come into effect from June this year.
The changes are projected to result in a total benefit to members of approximately $68 million per year while the 2020 financial year impact on net profit after tax is expected to be $45 million.
Acting executive general manager of Colonial First State Kelly Power said the changes would see half a million members benefit from lower fees.
“We know lowering fees will benefit member retirement saving outcomes and we’re aiming to make our platform and investments as cost effective as possible for them,” she said.
FirstWrap Plus members will have tiered administrations fees reduced by 30 percent while wholesale members will have an improved fee rebate for members with a starting balance of $100,000.
Previously only available to members with over $800,000, changes for wholesale members will see fees reduced by 0.05 of a percentage point for the portion of their balance between $100,000 and $500,000 and increased from there.
FirstChoice Employer Super members will have their MySuper investment fees reduced and regulatory reform fee will be removed across all products.
Colonial First State will also introduce three new low-cost index options, conservative, diversified and growth to give members access to a diverse range of assets with low fees.
Ms Power said there was demand for these index funds and these new funds would have reduced investment fees similar to the existing products.
“We’ve seen a significant increase in demand for index funds over recent years, with 80 per cent of advisers now using index investments due to the benefits they provide members, including lower cost, diversification and simplicity,” she said.
