AMP has reported a new set of fee reductions across its super products will affect 500,000 clients, as part of the wealth giant’s major cutback and restructure of its superannuation offering.
The latest fee cuts include a shrinking down of the investment fee on AMP’s generic MySuper life cycle options from 0.32 per cent to 0.3 per cent on a range of products from Friday.
The company will also remove investment fees on cash options for AMP’s SignatureSuper, SignatureSuper Select, SignatureSuper Allocated Pension and all term deposits entered into after 31 January.
Further, the Stronger Super Fee will also be removed from 28 February, which will decrease the administration fee for AMP choice investment options on a number of products by 0.13 per cent.
After being criticised for measures across its superannuation offering during the royal commission, such as the fees-for-no-service scandal, AMP committed to a simplification program for the segment, which will see changes take place across its funds, trustees, products and wrap platforms.
An original plan presented to shareholders in August showed AMP intended to condense its its two trustees will to one and a downsizing of nine product administration systems to two.
The most drastic changes could be seen with the range of retail superannuation products falling to five from a previous 72, and around 170 investment options being rationalised to around 50.
But the group later provided an updated answer to the House of Representatives standing committee on economics, saying the simplification process would see AMP move to two funds from seven, Super Directions Fund and the Wealth Fund, and its one super trustee would be its subsidiary NM Super.
NM Super is set to play “a more active role” under the new model, investing directly in super assets instead of going through life-backed investment policies issued by AMP Life.
Currently, the group’s super funds invest in life-backed insurance policies issued by the life insurance business, and they also outsource administration, product development and product development functions to AMP Life.
AMP reported the trustee will also be directly engaging its investment manager and custodian, as well as using a new related party service provider, AWM Services, for administration and product development.
The group anticipates the reshaping of its wealth business will be completed in the second quarter.
Lara Bourguignon, managing director for superannuation, retirement & platforms commented outcomes for clients is central to AMP’s strategy moving forward.
“The fee cuts form part of AMP’s major program to simplify our superannuation and wrap platform businesses, which will see a significant reduction of super products and enable us to provide more benefits to clients,” Ms Bourguignon said.
AMP has promised a simpler governance structure, a stronger trustee operating model, and lower costs.
The cuts have followed separate fee deductions for AMP’s MySuper products and MyNorth wrap platform clients in 2018 and 2019.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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