Smaller super funds unfairly burdened by regulatory levy model: CPA

Members of small and medium-sized super funds have become "collateral damage" in an imperfect regulatory funding model, CPA Australia says, in response to Treasury's proposed levy changes for 2025-26.

CPA Australia superannuation lead Richard Webb said the Financial Institutions Supervisory Levies, which are collected by APRA to recover costs incurred for regulating the superannuation industry, are a "key component to the integrity of the system," but the current model is "unfair and change is long overdue."

"Despite the total levies for next year falling, members of smaller funds continue to make significantly greater contributions than those of large funds," Webb said.

"What's more, the reduction passed on to members of small and medium-sized funds is less than the reduction for members of larger funds. This is rubbing salt into the wounds."

He pointed out that under the proposed levy changes, a large fund with $360 billion in assets and 3.42 million members would be charged $10.3 million in 2025-26.

Meanwhile, a medium-sized fund with $9.3 billion in assets and 26,063 members would be charged $909,000, while a small fund with $349 million and 2239 members would face a $34,000 levy.

For members of this large super fund, this would equate to an annual charge of $3.01, down from $3.71 in 2024-25. Members of medium-sized funds would pay $34.87, down from $39.24, while those in small funds would be charged $15.26, reduced from $17.17.

This represents a reduction of 18.9% for large super fund members, compared with 11.8% for medium-sized fund members and 11.1% for those in small funds.

More than 1.5 million Australians hold superannuation accounts with a super fund with less than $20 billion in assets, CPA Australia noted.

Webb said members of smaller super funds were already bearing a higher burden of administration costs and it is unfair to further increase this with a disproportionate share of the levies required to fund the regulation of the system.

"We acknowledge that current government policies aim to encourage mergers of super funds to reduce fees for members. However, we believe that there is more work to be done in the meantime to ensure that members of smaller funds do not continue to pay more than their fair share," he said.

Separately, Webb was concerned that the funding allocation for the Gateway Network Governance Body (GNGB) - which governs the Superannuation Transmission Network (STN) - was not sufficient to prepare the organisation for the much-needed investment that will be required to manage with new Payday Super requirements.

"The levies attributable to the GNGB is forecast to increase by just $100,000," he said.

"However, in addition to an increased focus on cyber threats and data security, the GNGB also oversees the work undertaken by the STN in preparation for Payday Super.

"This crucial work does not appear to have been factored into this. We would have expected to see around a five-fold increase in this funding."