Royal Commission to probe super fund fees and charges

The Royal Commission enquiring into the actions of banks, the financial services sector and superannuation funds is now underway and may help to solve some problems.Compulsory Superannuation has been a crock for baby-boomers. It's OK for the high flying GenYers and subsequent generations with its generous tax breaks. But for those about to retire it has been useless. After a lifetime working and paying taxes those around 65 and 70 get little except the prudent savings accumulated over the years. One 70 year old recently cashed- out his super – the princely sum of $18,500. For most of the working life of people that age, superannuation contributions from employers were not available. Following the introduction of compulsory super, many only had limited part time employment and may have been largely self-employed - taking meager living expenses out of business income. With a low level of disposable income, there was no opportunity to take advantage of tax breaks and shovel thousands of dollars into a super fund. It would have been far more beneficial for them if they had been given the opportunity to invest the money themselves rather than see the funds disappear in super fund management fees. Investing the money in property would have seen it grow into a real nest egg. Thankfully from earlier investments, many retirees won't go hungry – but they probably won't be able retire anytime soon. The concept of compulsory super was more about providing a massive slush fund to prop up the share market and the financial services industry. If Keating had been serious about super providing retirement income, fund management fees would only have been levied on profits made by the funds each year – instead of being skimmed off the top of total funds under management. Management fees should only be drawn from the current year's growth. Fund managers are able charge a range of fees, and on a typical $50,000 account annual fees can vary from $300 to $1200 - making a big dent in retirement savings.

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