Industry fund flags further fee cuts

A $14 billion industry super fund is flagging further fee reductions from July 1 and to become one of the lowest-cost funds in Australia.

Following its merger with Rio Tinto Staff Superannuation Fund on 1 July 2017, Equip Super reports "better than expected savings" on top of initial estimates of $10 million per year.

"The fund now expects annual savings to be up to 20% higher," Equip chief executive Nick Vamvakas said.

By 1 July 2018, Vamvakas believes the fees will be among the lowest in the industry, with potential via future mergers to push them even lower.

In October last year, Equip cut the weekly administration fees for accumulation accounts from $1.50 to $1.25.

Its asset-based administration fee has also been reduced from 0.2% per annum to 0.15% per annum; maximum in asset-based administration fees payable by an accumulation member also fell from $900 to $750 annually.

He said while it's easy to factor in the 'big ticket' items such as custodian and administration costs when considering a merger, a multitude of incidental savings can fly under the radar.

"Such things as membership and licensing fees, technology enhancement and new opportunities for greater utilisation of internal resources and services are the sort of things that add considerable commercial value to the merging funds," Vamvakas said.

He added the cost savings will substantially benefit the 75,000 members; there'll also be extra capacity to fund on-going investment in technology, products and services to help members achieve financial security upon retirement.

The merger with Rio Tinto Staff Superannuation Fund saw Equip double funds under management to $14 billion. The integration is expected to finalise on 30 June 2018.

Vamvakas added: "Member expectations are rising and it's not just about lower fees. The future is about the trust relationship between members and their fund, which is built on their fund's capacity to evolve and deliver the products and services they need at scale."

Read more: Rio Tinto Staff Superannuation FundSuperannuationEquip SuperNick Vamvakas
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