Smaller super funds pay a higher share per member for regulatory costs compared to larger retirement savings vehicles despite a decrease in the levies being applied to them and the recovery model for these costs needs to be overhauled, according to a major accounting body.
CPA Australia superannuation lead Richard Webb said the disparity in the regulatory costs charged to members of Australian Prudential Regulation Authority (APRA)-regulated funds is evident in the figures released by Treasury’s as part of its annual consultation on the Proposed Financial Institutions Supervisory Levies for 2025/26.
“The Financial Institutions Supervisory Levies are designed to recover costs incurred by the agencies responsible for regulating the super industry and are therefore a key component to the integrity of the system. However, the current model for recovering these costs is unfair and change is long overdue,” Webb said.
He noted changes to the levy in the consultation would see a large fund with total assets of $360 billion and 3.42 million member accounts being charged $10.3 million in 2025/26. In comparison, a medium-sized fund with total assets of $9.3 billion and 26,063 members would be charged $909,000 and a small retirement savings vehicle with assets of $349 million and 2239 members would be charged about $34,000.
Based on this example, members of large super funds would pay an annual charge of $3.01 for the 2026 financial year, down from $3.71 in 2024/25, he said.
This figure would be much higher for members of medium-sized funds, who would pay an annual charge of $34.87, down from $39.24, as well as for small fund members, whose annual charge would be $15.26, down from $17.17.
Webb also noted the reduction in the regulatory levy recovery cost for this year for large fund members was 18.9 per cent compared to 11.8 per cent for those with a medium-sized retirement savings vehicle and 11.1 per cent for those with a small fund.
“Despite the total levies for next year falling, members of smaller funds continue to make significantly greater contributions than those of large funds. What’s more, the reduction passed on to members of small and medium-sized funds is less than the reduction for members of larger funds. This is simply rubbing salt into the wounds,” he said.
He added CPA Australia was calling on Treasury to reconsider the formula used to charge regulatory costs to members given small and medium-sized funds “appeared to have become collateral damage in an imperfect model”, and 1.5 million people have accounts with a super fund with less than $20 billion in assets.
“We acknowledge that current government policies aim to encourage mergers of super funds to reduce fees for members. However, we believe that there is more work to be done in the meantime to ensure that members of smaller funds do not continue to pay more than their fair share,” he said.
