Is AMP's new super product an industry fund?
Retail sector begins transformation
By
Christine St Anne
Thu 27 May 2010
A new low-cost, simple super product was launched last week. Sound like an industry fund? No, it's the latest product from retail giant AMP.
AMP's Flexible Super product is the latest low-cost superannuation product offering from the retail industry.
With low fees, simple options and no commissions, AMP Flexible Super certainly sounds like an industry fund.
Of course, it isn't. AMP does not represent an industry and is an Australian Securities Exchange-listed company, however, the product does have some of the hallmarks of an industry fund.
At $1.50 a week (plus 0.6 per cent for the basic index option) it certainly is cheaper than some other retail super funds.
BT Super for Life was the last low-fee offering from the retail sector. The product also offers simple options and no commissions. For a person with a super balance of $50,000, statistics from SuperRatings highlight that the two products are cost competitive with industry funds.
AMP's product costs $403 a year, while BT's product costs $555 a year.
For the same $50,000 balance, SuperRatings research shows the average industry fund costs $514 a year.
The launch of these products indicates the retail sector is starting to transform itself ahead of federal government action on the Cooper review.
Cooper review chair Jeremy Cooper has already foreshadowed that the industry needs to offer consumers low-cost simple super products, through his MySuper recommendation.
And with the industry now committed to phasing out commissions, other retail funds will most likely offer similar products.
The move by these retail funds shows the message about fees and commissions eroding retirement savings has filtered through to the market, Australian Institute of Superannuation Trustees chief executive Fiona Reynolds says.
As head of the super body that oversees the not-for-profit sector, Reynolds knows industry funds will be facing competition.
She says these funds will need to compete on the basis of service and brand as the retail sector lowers its cost.
Just last week, the industry super funds' compare-the-pair campaign re-emerged on television.
With what's been happening in the past few months, the advertisement's point on commissions could soon be redundant.
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