The great super rip-off

Z

zurnaik

Member
Ok I know I might be stating the obvious here but I think that "Administration fees" for super funds are a huge ripoff. It seems that the 'administration fee' (ie the cream that the super fund company takes off the top) is on average 2 - 5x as much as the underlying investment funds 'investment fees.' It seems to me that it is the people DOING the actual hard work of managing the money in the investment fund like doing research, complying with ASIC, writing up fancy prospectus only need 0.25% to 1% to do this important task while the super fund takes 1-2% off the top for answering phone calls, writing letters, sending emails and pushing a button to create the automated tax return.

I have been looking at Spectrum Super for direct share investment and they have an administration fee for "costs for managing your investment" of 1.845% for listed securities, which by the way is MORE than if you have it in a managed fund (1.538%) or term deposit (1.025%). This means that if you have $20k in the share market through them you are paying $369 per year...for what? For some chump to go on E*Trade once and buy some shares for you? Not to mention the $38.44 brokerage. The fee drops to 1.025% for $175k to $400k and 0.41% for $400k+. Let's say you have $400k in the stock market with them, you are now paying $1640 per year. It's not like it takes much more actual effort to press 'buy 100000' versus 'buy 10000'!! I feel sorry for the person who has $399k because they would be paying $4089.75 in administration fees.

I looked at my current super fund and it wasn't much better with a 1.15% administration fee with most investment funds on offer taking about half of that but no direct share investment. So I would be paying an extra 0.7% for the 'luxury' of having access to direct shares that I give instructions for, which I would have thought was easier to 'manage' than unit prices and multi-manager fund strategies.

If ESuperFund can take care of the entire regulatory framework for a whole self-managed super fund for $699 (which includes their own profit!) why does it take these super fund companies so many millions of $ to do the same thing just for their own single fund. ESuperFund has proven that it is not that hard to automate the process and still comply with the regulations. At the end of the day that's what I think most people want to pay someone for - to do the boring accounting and box ticking work. Is it no wonder that people are flocking to SMSF in droves? It clearly is the more competitive option. Forget all this business about 'free' retirement seminars, manned offices in every CBD, corny television advertising campaigns and Christmas drinks for the staff.

Below I will break down the 'breakeven' point for Spectrum Super vs ESuperFund for direct share investing:

ESuperFund total cost per year $699 fee inc GST + $150 ATO Levy = $849

Spectrum Super, maximum 80% in shares: 1.845% fee, other 20% in ready-made funds 1.538%, membership fee $53.30. Let the unknown total amount of super be x and the breakeven point is $849 in fees therefore:

x * 0.8 * 0.01845 + x * 0.2 * 0.0153 + 53.30 = 849

x = (849 - 53.30)/ (0.8*0.1845 + 0.2*0.0153)
x = $44652.08

So you're looking at starting to be better off with approx >$45k using ESuperFund with some advantages being that you can go to 100% share investing (compared to 80%), lower brokerage costs, faster brokerage and unlimited switching investment at no extra cost.

I just see these fees as another tax because they are a result of the superannuation/taxation regulations that create this sort of super-fund oligarchy at the top who love complex regulations because it means they can use it as an advantage and make people pay through the nose for it.
 
Savige Silver said:
And a lot of those "Managers" will lose money for you. Super sucks, biggest rort ever perpetuated on the Australian worker
Click to expand...

Although you have a valid point let me be clear. The 'administration fee' is not for managing any actual money - it is just a FINDERS FEE. The "Manager" fees that you are referring to is the 'investment fee.' The 'administration fee' is merely the supposed cost for the super fund company (eg Spectrum Super, Statewide Super etc) to email the fund Manger (eg BT, AMP, Zurich Investment) and say "Yo dude, we want to open an account with you and give you $10 million of our members money to manage." So why is the finders fee more than the investment fee? lol...The finders fee entails hardly any risk where as the investment fee entails the risk of actually trying to turn a profit with that $10 million while trying to avoid getting sent to jail for fraud or insider trading. It doesn't make sense.

Even more non-nonsensical is that Spectrum Super charge an even greater 'finders fee' for direct share investment which is even less risk/effort on their part because you are the one directing the whole thing and access to the share market is much easier than access to managed funds.
 
do your self a favour - set up a SMSF
i just finished setting mine up....couldn't be happier.

looking at rollover statement : we paid 1k in fees for 10 months June10 till March11.....
and the fund lost money....so they hit you while your down...nice
 
unfunkable said:
do your self a favour - set up a SMSF
i just finished setting mine up....couldn't be happier.

looking at rollover statement : we paid 1k in fees for 10 months June10 till March11.....
and the fund lost money....so they hit you while your down...nice
Click to expand...

I will definitely be going down the SMSF route in about a year or two when it becomes cost-effective for me.
 
unfunkable said:
do your self a favour - set up a SMSF
Click to expand...

+1

I reckon set one up now, while you can.

With so much money being ripped out of traditional super funds and into SMSF, the funds will be lobbying hard to make it harder for Joe Blow to set up a SMSF.
 
yes do it now...
i think you could manage the money better yourself....
i worked out, if i had put the money in a term deposit, i would of came out on top.

not sure what the monkeys at the superfund was doing. it was superwrap - a product of BT i believe
 
I've been wanting to set up an SMSF for a long long time but still stuck at choosing a company name for the corporate trustee.
 
Thanks GP! That is a nice simple solution. Sometimes I swear I make things difficult for myself by trying to dream up the most complicated method.
 
or call it
gold holdings r us

the warehouse that supplies us is officially called
drugs r us pty ltd
i've also seen ' omigawd pty ltd'

i went the mundane route - used our initials ....wish i was a bit more creative
 
Call it." FREEDOM"

And mate all above are correct,ill be harsher and say after listening to the above only a chump would not set up a self managed super fund.
I am no genius the spell check goes crazy when i type... if i can do it anyone canJust do it!
My fund managers lost money on a regular basis, until finally i got angry enough to make the move.
Never looked back,fees are low,risks are low..and guess what my fund hasn't made a loss yet.
Thats because its my money and i don't make stupid decisions.
The super industry is filled with sharks and idiot fund managers and they ain't doing it for your health buddy!!
They are using your money for their ego trips and junkets paid by YOU!

My wife is my biggest critic..now after seeing the balance sheet turn around she's converting her super over to my fund..or should i say our fund in next few weeks..
And she's the one good with money..
REDBACK OUT
 
unfunkable said:
looking at rollover statement : we paid 1k in fees for 10 months June10 till March11.....
and the fund lost money....so they hit you while your down...nice
Click to expand...

Hey Unfunkable cry me a river" lost 1k in fees" Mate they charged me an exit fee of about 4k,
That was after fees and losing money 3 times in a 5 year period.
The best part was one year we didn't receive our reconciliation statement and we hounded our manager until finally he says look i have it but the best thing to do with the statement is just slip it in a draw and ignore itbecause they didn't do to well this year :rolleyes:
The criminal and i mean criminal part of the Super system is the Govt forces us to partake in a contract where the conditions agreed upon can be changed as they see fit.

REDBACK
 
ouch...it hurts more when most of my super is self contributed as i'm self employed and i see it literally going down the drain.

not anymore though! :D
 
zurnaik said:
Ok I know I might be stating the obvious here but I think that "Administration fees" for super funds are a huge ripoff. It seems that the 'administration fee' (ie the cream that the super fund company takes off the top) is on average 2 - 5x as much as the underlying investment funds 'investment fees.' It seems to me that it is the people DOING the actual hard work of managing the money in the investment fund like doing research, complying with ASIC, writing up fancy prospectus only need 0.25% to 1% to do this important task while the super fund takes 1-2% off the top for answering phone calls, writing letters, sending emails and pushing a button to create the automated tax return.
Click to expand...

Mate - you nailed it! Why do you think these barstads are so keen to have the government swipe 12% (as apposed to 9%) of every pay packet??
So these barstads can skim off many billions of dollars more in fees!

Its one massive ripoff!

Super is a scam - the best way to try to circumvent the government theft is to set up a SMSF...
No doubt the government will change the rules eventually to swipe the money in SMSF's as well! So dont get too excited...
but for now its by far the best option.

Just realise that most of us will probably never even catch a whiff of most of the money in our super... its a great big pot of money that our socialist bankrupt government cant wait to get its greedy paws on
 
Yippe-Ki-Ya said:
... Why do you think these barstads are so keen to have the government swipe 12% (as apposed to 9%) of every pay packet??
So these barstads can skim off many billions of dollars more in fees!
Click to expand...

Haha, so true. My first thought on seeing that 12% campaign started by those funds was well 9% would be more than enough if they didn't keep losing so much each and every year. What a bunch of losers and yet they want to be rewarded more!
 
yky...at least we agree on this
super is the biggest scam ever!
does anybody know any oldies living comfortably off a pension from a fund that wasn't a smsf?
i know a some living comfortably off a SMSF...
 
Yes i know a lovely couple that are doing well without a SMSF but their pension was a secondary fall back position as they had property holdings which allowed them flexibility to manipulate their structure, but i know its another area of specialty ill have to look into ie balancing assets with pension eligibility etc.
REDBACK
 
Super great topic for discussion.


I am getting off my ass this easter and doing some serious research into going SMSF. I have my wife on board after some convincing arguments ;), after all she is a fiscal conservative. She worked for one of the big fund managers, and the rorts they perform would leave you breathless, Amex bills in the 10's of 1000's, luches including Moet and Gifts, couple of thousand....

Time to take control, and as they say if you make a mistake at least you can give yourself an uppercut, instead of going to the lockup for fixing some crook up.
 
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