Is your superannuation fund hiding fees?

A highly respected superannuation fund research house “Chant West” released a report in early June 2013 stating that “fee disclosure has long been a weakness in the Australian super industry. Incomplete and inconsistent disclosure has made it hard for researchers, let alone consumers, to compare funds on a like with like basis“.

Chant West went on to say:

In 2007, we first reported on what we called the ?ussian Doll Syndrome? we found that the typical growth fund with a typical asset allocation was understating its fees by about 30 basis points on average. Given that total reported management costs at the time were in the range of 60 to 80 basis points, this represented a difference of about 30% to 35% between the fund? ?rue?fees and what it was actually disclosing.

One of the main areas where fees regarding disclosure were not being completed was:

1. Listed property and infrastructure trusts ?where management fees paid by the listed vehicles are typically not disclosed.
This is highly relevant due to the fact that “Not-for-profit” superannuation funds typically hold 30% of their investment allocation within the above listed property and infrastructure assets. Chant West also stated this included unlisted property investments. Similarly, “retail” superannuation funds are also not in the clear on this issue also holding an average of 15% within their typical growth default fund.
Do you know the true underlying fees you are paying within your superannuation fund?

Joel Xuereb