Report author Jim Minifie described his findings as an issue for both taxpayers and the Abbott Government, which could be facing significant consequences as it considers changes to the pension scheme.
Dr Minifie told SBS he was surprised by the results, which found that Australians on average pay fees of 1.2 per cent on their super account balances, more than twice the median OECD rate.
“Account payers are paying about $1,300 a year on average and over a lifetime, that reduces returns by about 20 per cent,” he said.
“… They’re very substantial impacts on peoples’ retirement adequacy and it becomes a public policy issue.”
Listen: Jim Minifie speaks to Stephanie Anderson.
Dr Minifie said the superannuation issue could impact upon pensions as speculation remains over the government’s intention to lift the retirement age.
However, he said the Institute did not expect the government to address the issue in next month’s budget.
“We don’t expect the government to respond to it in the current budget,” he said.
“The reforms we have in mind don’t require the government to allocate significant funds. Fundamentally, this is an issue of microeconomic reform.”
Dr Minifie said recent reforms such as MySuper will provide little help, and action should be taken to reduce fees by at least 50 per cent.
He said policy makers needed to acknowledge the issue, before holding a tender to increase competition and push down fees.
“Government needs to make tax time super choice time,” he said.
“People should find it far easier to compare what they’re paying… and switch on the spot if they desire.”
Opposition finance spokesman Tony Burke has defended the previous Labor government super reforms amid claims Australians are paying excess super fees.
The report outlined a lack of focus on superannuation and retirement among taxpayers, stating that less than a third of people choose their own fund.
A survey funded by the Australian Tax Office found that 69 per cent of people did not choose their own, while an Australian Bureau of Statistics study found that 70 per cent of people have their primary superannuation with an employer-nominated fund.
“Although many people know they should make an informed choice, they procrastinate in doing so,” it read.