Super review sets sights on fees that act like wealth tax

Jeremy Cooper, the deputy chairman of the Australian Securities and Investments Commission, yesterday set out some priorities of the coming super system review, including the question of whether "genuine competition" existed in super and the problem of "long and complex" disclosure documents.

But the spectrum of fees levied on the nation's $1 trillion of super savings emerged as a major issue, with Mr Cooper singling out percentage-based investment management fees as a particular focus.

"Percentage fees should be looked at very carefully and trustees should be asking why fees structured in this way are appropriate," Mr Cooper said. "These fees operate like a wealth tax they attach themselves to your super savings."

Mr Cooper, who will leave ASIC to chair the review, made the comments in a speech to an Association of Superannuation Funds of Australia lunch in Sydney yesterday. It came a day after the group representing retail super funds - the Investment and Financial Services Association - pledged to phase out the payment of commissions on super products, part of a sweeping "super charter" that also promised more choice for consumers and better disclosure of how super fees are charged.

Mr Cooper welcomed IFSA's move but said that, as far as the super review panel was concerned, "nothing is sacred, everything is on the table", when it came to fees on super savings.

The review would aim to build confidence in the super system, he said, observing that the number of people switching to cash or more conservative investment options was worrying because it demonstrated that "many Australians do not understand super".

"The boom years created unrealistic expectations - expectations that could never be fulfilled," he said.

Mr Cooper suggested that Australia's 11 million super investors might need a body such as the Australian Shareholders Association to represent their interests. "It is also interesting that there is no annual general meeting equivalent in super," he said.

"The review will ask whether these are missing links that make super a bit less competitive, and perhaps a bit less transparent, than it should be."

The review starts next month and will report next year.