Super commisions attacked

Inappropriate commissions can cut the value of a superannuation pay out by as much as $120,000 over a working life, according to new research.

The research, conducted by the independent organisation, Rainmaker, was released today by the Industry Super Network.

The ISN’s spokesman, David Whiteley, said sales commissions on compulsory Superannuation Guarantee would amount to $765 million this year.

“Commissions are levied for ongoing financial advice, but the value of such advice is unclear,” Mr Whiteley said.

“This is an area requiring further investigation.

“But it does appear that many employees are not even aware that they are paying commissions out of their compulsory contributions,” Mr Whiteley added.

He warned, in particular, that:-

-Many employees join an employer nominated default fund at their workplace which often pay commissions to financial advisers

and

-Where employees changed jobs tey are often automatically transferred into higher cost retail funds.

So what can you do to protect your nest egg?

Mr Whitely said people should check their superannuation statements carefully to identify any fees or commissions that have been extracted.

And where commissions to financial planners are identified, they should try to assess the value of the advice being provided.

Mr Whitely said it would also be a good idea for people to compare the performance of their present funds with that of other funds, including industry super funds.

He said industry super funds, mostly started by unions, do not pay commissions to financial planners.

They are widely recognised as being among the superannuation industry’s lowest cost operators.