The influential Consumers’ Institute magazine Consumer has come out with a hard hitting article rubbishing a number of superannuation schemes
The article, "Superannuation sharks" says some of the products being offered by fund managers and life offices "have horrendouly complex fee structures, with built in penalties and clawbacks."
It also criticises the way some advisers are selling super schemes to the public.
The article singles out nine particular funds as being "super sharks", but it also names 10 funds its says are okay because they have flexible, low cost structures.
Interestingly two managers, Tower Retirement Investment and National Mutual have products in both lists.
One of the so-called "super sharks", Prudential, has told its advisers that the article is "not balanced and does not compare apples with apples."
The article illustrates that while there are a bunch of ‘new generation’ flexible superannuation schemes, there are a lot of the old, so-called dinosaur products with high fees still being sold.
It suggests advisers are selling these older products to the less sophisticated investors, and saving the others, which generate lower commissions, for the more investment-savvy people.
In total Consumer has identified seven problem areas with super schemes. They are:
Enormous commissions
Small savers pay very high fees in relation to their contributions
Initial savings can have extremely high fees
Performance assessment can mislead
Results can be massaged
Examples used in brochures can mislead
Brochures contain idle boasts.
The article is in the January/February issue of Consumer which was published this week.
The influential Consumers’ Institute magazine Consumer has come out with a hard hitting article rubbishing a number of superannuation schemes 