The Reserve Bank of Australia (RBA) on Wed 2.4.2014, released its submission to the Murray Financial System Inquiry, including an overview of the role of superannuation in the financial system and the ways in which it differs internationally.

The Bank called on the Inquiry panel to further investigate a number of superannuation-related issues, including fees and costs. The RBA claims that operating costs for Australian super funds are higher than in many other OECD countries, partly due to the defined contribution (DC) structure of funds, disengagement among members, as well as complexity and difficulty in making comparisons of fees across funds.

Overall, the RBA considers that having a commercial provider of superannuation services, and being in a fund with an active investment strategy, appear to be the major drivers of superannuation fund fees.

While the Stronger Super reforms (such as MySuper and SuperStream) have helped to address some of the drivers of member fees, the RBA says a potential remaining issue is whether the current fee structure itself promotes efficiency and competitive pressure in the superannuation system.

[LTN 64, 3/4/14]