It’s wrong to blame the superannuation industry for failing consumers over the billions of dollars locked up in multiple funds, says the head of Australia’s largest unclaimed super fund.
Responding to a study by Choice magazine that claims super funds are ripping off consumers by charging exorbitant exit fees and administration costs, Ausfund’s trustee Super Partners executive director Frank Gullone said employees and employers also need to work together to consolidate lost super.
“It’s not appropriate that Choice blames the industry,” Gullone said.
“Super funds are doing an enormous amount to help [and] are very active in trying to match accounts. There’s not much more the funds can do.”
Choice research suggests 4.3 million people – around a third of the current labour force – have multiple super accounts. It says the vast majority are unnecessary and cause financial harm to consumers with the fees associated with them.
The study gave the real life example of a man who would have been charged $12,000 in exit fees out of his $30,000 balance if he left the account before he retired. If he fails to contribute to the fund he will be deemed to have left the fund and suffer the exit penalty.
Choice says funds have an incentive to delay or frustrate account transfer.
“They certainly have no incentive to put resources into helping consumers consolidate into an account managed by another fund,” Choice said.
Gullone backed calls for exit fees to be abolished and said funds should only be charging a maximum exit administration fee of $100.
“Industry and government need to come up with a standardised arrangement for entry and exit of funds across the whole industry,” Gullone said.
