Insurance fees eat into retirement savings

Mozo

Wednesday 23 June 2010

Insurance fees on super accounts are eating into Australians’ retirement savings, an expert has warned.

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Mark Ashburn, national sales manager for Professional Associations Super (PAS), noted that while underinsurance is often an issue for many Australians, it is also possible to have "too much of a good thing".

"It’s widely accepted that having multiple super accounts isn’t ideal, as fees tend to eat into what are often small balances," he said.

"However, it’s not just investment fees that will see your savings take a hit. There are often insurance policies for death and total permanent disability, but because the premiums come straight out of your balance it’s easy not to notice you’re paying them."

The comments came as PAS urged its members to consolidate their super into one fund by bringing together their life, TPD insurance and retirement savings under one roof.

Mr Ashburn’s concerns about dwindling retirement nest eggs may also encourage more Australians to compare savings accounts in search of lower fees and better returns.

Last week, the Australian Taxation Office revealed that over 8,000 Australian taxpayers have been caught illegally plundering their superannuation accounts this financial year.

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