The Real Fees Aussie Expats Maybe Paying In Their Superannuation
When you live in Australia, superannuation can be a key talking point, whether you’re on lunch with a few colleagues, watching the TV & see an ‘industry super fund ad’ or starting a new job. More than likely if you have had more than one job you’re going to have more than one superfund account. When you go overseas and become an expat, superannuation is the last thing on your mind and with the new changes coming in, it is really going to shine a spot light on what the real fees Aussie expats maybe paying in their superannuation. Do you know how many super funds you have? Do you know what insurance you have and is it still valid? Might be time for a review…
This month we saw the introduction of ASIC’s new fee disclosure rule changes. Many members whom actively review their superannuation statements will note the fee increase and this could cause some concern. However, it is merely the superannuation funds disclosing what was already being paid for in the background. One key hurdle for super funds is that this change will make once favoured funds seem a lot more costly than previously thought.
ASIC is seeking to backpedal on its controversial fee disclosure laws for superannuation funds which only launched two months ago. The Regulatory Guide 97 is set to be delayed with its implementation by ASIC with some key amendments being needed on the treatment of investment platforms and disclosure costs relating to indirect costs of investing. The aim is to provide clarity for members on what their actual fees are and therefore accurate comparisons can be made.
Industry super funds and private research companies are arguing that aspects of RG97 make retail funds look artificially cheap by avoiding certain disclosures of some of the related investment fees.
Research company Chant West and trusted source for many in the superannuation industry has confirmed that many super funds have already made the move to start reporting under the new regulation. Chant West has stated they expect that the estimated increase would add 0.19 percentage points to the investment costs for the average super funds.
An example of what these disclosures mean is provided below by Josh Callaghan from Canstar:
Fund A owns the property directly while Fund B owns it through a third-party property trust,” he said. “Fund A needs to account for and disclose all costs involved in generating an income from that property such as the cost of cleaning, maintenance and other expenses; while Fund B just needs to disclose the fee charged to them from the third-party. The result of this is while the investment strategy, cost to the fund member and return of both funds won’t change, Fund A’s disclosed fees will now be higher while Fund B’s fees remain the same
It is understandable that Industry Super Funds are kicking up a stink, a lot of their ad campaigns would need to be reviewed and amended which means millions of dollars in costs to them. The fact of the matter means that whilst the super fund is disclosing more fees, does not mean you are paying more, just more than you may have previously realised.
When you receive your latest statement make sure you pay particular attention to the fine print as that is the only way that you are going to understand the real fees Aussie expats maybe paying in their superannuation. It is only through a professional review that you may truly understand what you are paying and in turn determining whether you are receiving any value in return.