The battle has been joined with Federal Treasury finally deciding to weigh-in against unscrupulous superannuation giants.

A recent survey by Treasury has found that a whopping 1% of GDP is being siphoned off superannuation funds in fees. Senior Treasury official David Gruen has said the reduction of these fees would result in ‘widespread benefits’ to Australians and the economy as a whole.

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David Gruen. Photo: www.theaustralian.com.au

Superannuation companies currently havest $20 billion a year in superannuation fees. This is three times the figure of their counterparts in Britain. A lowering of these feees, even by a few fractions of a percent, would enable greater numbers of people to be able to support themselves in retirement through additions to their lump sums.

The Gillard government went some way to laying the ground work for superannuation fee reform. The MySuper and Superstream policies were designed to increase competitiveness and push down costs – all with the bottom line of leaving more money in the superannuation accounts.

Superannuation and finance companies in general have fought every step of the way. But the latest Treasury figures makes their position even more untenable.

Gruen cited a Grattan Institute study which proclaimed that a halving of fees would produce superannuation lumps sums 15% higher. Retirement incomes, it found, would benefit from this higer lump sum by 20%.

The downstream effects are enormous – Significantly less strain on aged care pensions means that money can be spent in other areas of the economy. Improved consumption by seniors boosts the domestic economy and increases the economic quality of life for everyone. And lower fees exert a pressure on superannuation companies to become more adaptive and efficient – perhaps a bitter pill in the short term, but some much needed tough love in the long.

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