This year, the superannuation industry saw the largest fall in its total expense ratio (TER) since the introduction of the MySuper reforms - however, this varies significantly across product types and market segments.
According to Rainmaker research, the TER now stands at 1.1%, down from 1.18% in 2016. While superannuation assets have increased year-on-year - thereby increasing the overall dollar value of fees paid by members - this has been partially offset by the fall in average fees. Rainmaker said this reflects both economies of scale and market pressures.
As above, though, the drop in fees has not been uniform across the whole industry. Workplace APRA-regulated funds are the cheapest, with an average TER of 1.15%; the MySuper products within this category have an even lower TER of 1.03%.
The pre-RG97 research showed that not-for-profit (NFP) MySuper funds make up about a third of total assets in APRA-regulated super; NFP choice products make up another third. Because of the lower fees in these funds, though, they collectively represent less than 50% of fee revenue.
Retail MySuper products have much lower fee structures than their choice counterparts, but because the majority of retail assets remain in non-MySuper or choice products, the retail sector in aggregate accounts for about 40% of assets and over 50% of fees paid.
Rainmaker said that one of the market segments with the highest fee structures are legacy retail products which are now closed to new members.
"Legacy retail products which are now closed have fees 40% higher than open contemporary products, implying that rather than innovate and improve legacy products retail product providers have innovated only within their new products. This has the potential to considerably disadvantage members in these legacy products," Rainmaker said.