Heron urges corporate super fund members to be wary of Choice

Independent superannuation consultants The Heron Partnership has warned members of corporate superannuation funds to be cautious in their approach to choice of fund.

Heron encourages members of these funds to consider factors such as investment options, insurance, organisation and product review, and ancillary benefits before deciding to change funds. In particular corporate superannuation fund members should assess the fee structure of their current fund in comparison to the alternatives.

Heron's recent research found the combined administration and investment fees relating to multi-manager arrangements for corporate super funds range between 1.20 per cent and 0.65 per cent of members assets.

In comparison to retail funds, where the same fee average is 2.0 per cent or higher, corporate super fund members could end up paying two or even three times the amount of fees as a result of switching funds.

Heron feels employers have a large part to play in the process and should assist their employees by providing clear information alerting them about the dangers of Choice.

Managing director for The Heron Partnership Chris Butler says, "Based on outcomes of outsourcing tenders managed by The Heron Partnership for employer clients, the larger the employer organisation the larger the difference between the fees in a company fund compared with a retail fund. Employees therefore need to tread carefully and make decisions around Choice in a holistic manner."

To aid the process of choosing a superannuation fund Heron is about to launch a tool that will allow comparisons of super funds at a member level. Called Heron Advisor it will be released in the coming months by a number of financial planning groups and financial institutions.