Many Australians remain unaware that they can be automatically moved from one type of fund product to another when they change or lose their job. The practice known as ‘fund flipping’ can result in a significant spike in fees when the member is moved from a corporate fund into a personal fund.
A recent study by SuperRatings found fees can increase by as much as 60% in some instances. This can include increases in fees and commissions, decreases in insurance cover and/or increased insurance premiums.
Whilst pointing out the practice was not rampant through every fund, SuperRatings CEO Jeff Bresnahan emphasised
“One of the most disappointing aspects of the continuation of flipping is the fact that it is an issue that is shattering the confidence of Australians in their super system, just as members are feeling there may be light at the end of the tunnel. It all comes back to funds being open and honest with members.”
The application of fees and charges to super members is on the agenda for the Cooper review into the superannuation system.