Australians have been urged to check their super after startling revelations that some people have had their accounts almost completely wiped out.
The corporate watchdog ASIC is concerned that some super trustees are failing to detect excessive fees, unusual charges and risky switching.
A super trustee is the person or company responsible for running a super fund and looking after members’ retirement savings.
‘All superannuation trustees should immediately review and consider areas for improvement before risks translate to serious harms for Australians and their hard-earned retirement savings,’ ASIC Commissioner Simone Constant told the ABC.
It comes after the failure of Shield and First Guardian, which cost more than 11,000 Australians an estimated $1 billion in retirement savings.
‘One member, for example, where almost 100 per cent of their balance was eroded by fees, inappropriate fees that weren’t picked up by the trustee,’ Ms Constant said.
‘Almost 100 per cent of their balance.’
In another example highlighted by the commissioner, members affected by a particular advice model lost, on average, half their super to fees.
ASIC Commissioner Simone Constant (pictured) warned that excessive fees had wiped out some members’ entire super balances
‘There was a slab that went to one area of advice where, on average, half of the super balances were eroded,’ Ms Constant said.
‘That’s pretty harmful stuff.’
The regulator found too many trustees were more concerned about maintaining relationships with advisers than protecting their members’ savings.
ASIC also found advice fee caps remained alarmingly high. One trustee had a cap of $25,000, while another was seeking approval for a $30,000 cap.
Three trustees had no upper dollar limit on some percentage-based fees, opening the way for huge deductions from member accounts.
The watchdog is now warning trustees that tougher scrutiny is on the way following its detailed 29-page report, Safeguarding super: How well are platform trustees monitoring risks to retirement savings.
‘It goes to the heart of those concerns, making sure that members are protected from those egregious fees for no service outcomes, making sure that the flags go up when there’s harmful switching, which is what we saw in the middle of the Shield and First Guardian outcomes, and making sure that those member funds are properly held on trust and not eroded,’ Ms Constant said.
‘We’ll be going deeper, we’ll probably be even more public about names and profiling practices, and we won’t be backing away from enforcement outcomes too.
A review covering funds that hold 72 per cent of Australians’ super accounts found trustees weren’t doing ‘enough’ to protect members
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‘Superannuation is so important to almost every working Australian now that we’re encouraging Australians, engage with your super like you do with your banks.
‘Expect those protections, expect those services, expect that support.
‘Our message, though, is also to Australians: superannuation is so important to almost every working Australian now that we’re encouraging Australians – engage with your super as you do with your banks.’
Australian superannuation platforms manage almost $300 billion, with advice fees totalling $2.2 billion.
‘The four and a half trillion dollar superannuation sector is a great asset for Australia and a great asset for Australians,’ Ms Constant said.
‘But in order to be that great asset, it needs to be done well, and that’s why we’re doing our work.’
