Eligible rollover funds (ERF) are charging exorbitant fees and obstructing millions of workers from finding their lost superannuation, researchers say.
In its annual rating of Australia’s 15 unclaimed super funds, research house the Heron Partnership could only award one, AUSfund, the top score of five stars.
“Our research has revealed that there is a wide gap between the overall quality of AUSfund and the other ERFs in the market,” The Heron Partnership managing director Chris Butler said.
The study found multiple problems with the other ERFs, such as excessive fees and unclear fee structures.
It also identified a lack of clear investment objectives and reporting criteria and the use of external investment advisers. It was also critical of outdated Product Disclosure Statements (PDS) on websites.
Butler said while the average account balance in an ERF is low, at around $1100, most funds are charging the consumer between 1.4 per cent and 8 per cent of their assets in annual fees, in contrast to the average 2 per cent fees that retail super funds charge.
“The [ERFs] are quite happy to get the fees and we think they’re excessive,” he said.
Only nine out of the 15 had websites, and only five of these had links to the Australian Taxation Office’s Superseeker website.
“It should be easy for people to access their ERF,” Butler said.
“Not enough effort is being put into making it easy for the members.”
Around one-third of Australia’s workforce has money tied up in lost super funds with total assets estimated at $5.4 billion.
“[ERFs] are becoming an important part of the marketplace because the average assets that people have in ERFs is increasing and more people are going into them,” Butler said.
