Young Aussies warned to think carefully about DIY super
Younger Australians with smaller retirement balances are being warned to be careful if they are considering switching to a self-managed super fund.
The recommendations from the industry’s super fund sector come as the corporate regulator issued a warning to super platform operators over their fee practices and the existence of potentially dangerous products.
The Super Members Council has submitted an application to the Federal Treasury, which is advising on fund protections following a scandal involving platform funds.
The council found a correlation between the increase in referral fees charged to super accounts over the last two years and a spike in super account switching.
He believes this trend has raised concerns about changing incentive effects for young Australians in parts of the super system, consultancy fee levels and the risks of super erosion.
Of particular concern is the potential impact of junior sector fund members with balances of less than $100,000 switching to SMSFs.
“The risks of change could be very significant for young Australians with small pension pots, as higher wages could seriously deplete their retirement savings at a crucial stage for their retirement savings,” council leader Misha Schubert said.
The council analyzed data from the Australian Prudential Regulation Authority and the Australian Taxation Office to find that total advisory fees deducted from super accounts increased by $1.1 billion between 2023 and 2025.
$815 million of the wage increase came from five super platforms.
SMSFs generally target older or wealthier investors who have higher super balances, closer to $2 million, have an appetite for more complex products and can afford higher fees.
On average, a person with less than $100,000 in super faces SMSF running costs 18 to 40 times higher than a MySuper product in a fund regulated by the prudential regulator.
The corporate regulator on Monday warned the super-platform sector after conducting a 15-month review of six platform trustees tasked with holdings of more than $300 billion in 977,000 member accounts.
The regulator felt “hugely disappointed” by the lack of progress in key areas since the last sector report in 2024.
These include advice fee deductions and a lack of fiduciary oversight of fee-related behavior, monitoring of holding limits and options on investment menus.
“We are concerned that some platform trustees are prioritizing their relationships with advisors in a way that poses an unacceptable risk to members’ superannuation balances,” a report said.
In the 10 years to 2025, retirement platforms have exploded in popularity.
Member benefits tripled to $396 billion compared to the traditional industry; this figure has more than doubled; Consultancy fees received from retirement platforms increased fourfold to 2.3 billion dollars.
ASIC’s report and the council’s submission follow the collapse of the First Guardian and Shield funds, which exposed hard-working Australians to highly speculative, illiquid assets and outright theft.
The impact left almost 11,000 people $1.1 billion out of pocket; Many have lost their entire savings after being persuaded to switch from standard super funds with the promise of sky-high returns.
