Most people in the workforce are preoccupied with making ends meet in the here and now. Home mortgage, food, running a car, school fees, and much more. They don't have time to think about their retirement, and how they might fund the cost of living once salary payments stop going into their bank account.
Banks have recently reduced some of their charges for personal banking products following the campaigns of consumer organisations such as Choice. But they continue to hit consumers with high fees for superannuation accounts because most people don't worry about super until they near retirement.
Last week the Australian Prudential Regulation Authority released its superannuation league tables. Crikey's Bernard Keane pointed out that the banks' in-house staff superannuation funds performed roughly twice as well as their retail funds, which are used by the public.
Keane suggests the difference reflects the impact of fees and commissions charged by banks for the retail funds. The in-house funds, on the other hand, are careful not to impose significant fees or charges. It's likely that this is the case partly because bank employees are more financially literate and therefore harder to exploit than members of the public. Over many years, such an impost mounts up to the extent that it is likely to have a significant material affect on the quality of life that workers are able to enjoy once they reach retirement.
The Edmund Rice Centre's Good Business ethics newsletter says that the Federal Government's Review into the Superannuation System has shown that there are no less than ten different types of fees that need to be taken into account when making informed investment decisions. There are many available options, but most consumers take the default and often more expensive option, because it is genuinely too difficult to read and understand Product Disclosure Statements, Annual Statements and many other documents.
To add to the confusion, there is pressure from governments and consumer advocates for the imposition of fees for some financial services which until now have been provided free of charge. If there's such a thing, these fees are 'good fees', as they are designed to keep financial advisers honest. Such professionals often work for commission from banks and other institutions, and are therefore likely to favour the interests of the banks before those of the people they are advising. Therefore a ban on commissions from banks, and replacing them with fees for