In the Financial System Inquiry's Interim Report (July 2014), it made considerable reference to the Grattan Institute's report on fees in the Australian superannuation system (Super Sting: April 2014). The Grattan report claims that Australians pay too much for superannuation when compared with other countries, and it recommends we hold a fee-based tender to select one or more funds to be the default fund for compulsory employer contributions for a period of time. This is similar to the approach used in the Chilean pension market.
We disagree with the main findings of the Grattan Report. We do not believe Australians are paying too much for superannuation given the high levels of competition in the industry at all levels. We don't agree that Chile's default fees are less than one-third of MySuper fees, as claimed by Grattan. Consequently, we don't believe it is necessary to introduce a fee-based tender system for default superannuation.
For more detail, read the full report.
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