Vanguard chairman and chief executive Bill McNabb believes the Australian superannuation system can learn a lot from the US and encourage employers to take a more active role in driving down fees paid by members.
The global head of the specialist low cost index fund manager, who is in the country to mark the 20th anniversary of Vanguard Australia, said relatively simple steps could half the fees most members pay for their retirement savings architecture.
"The strength of the Australian system is its universality. Its weakness is the lack of engagement," McNabb observed.
"In the US, companies have a fiduciary responsibility to employees. Employers put pressure on managers to cut fees. The 401k is the most competitive part of the funds industry and the service is far better than the ordinary retail experience."
He added that treasury staff of large listed organisations are conscious of what their employees pay for their corporate pension plan and use it as a point of differentiation when recruiting staff.
Rainmaker research shows that within MySuper, the cheapest segment of the APRA-regulated superannuation system, members pay an average of 101 basis points for their investment and administration fees.
"Most Fortune 1000 companies pay around 50 basis points at the expensive end. Smaller companies pay more but technology can bring that cost down," McNabb said, adding that the Australian government should consider regulatory mechanisms to encourage employers to have a bigger role in terms of oversight; though he did warn about that the process should not be made too bureaucratic.
Most of Vanguard's US 401k clients pay around 22 basis points.
McNabb said fund consolidation could also help lower fees, as could "brutal transparency" of fees.
"I've looked at the full value chain of fees in the [Australian] market place and I've struggled to work out what [members] are paying," he said.