Super funding model keeps unfair burden on members of smaller superannuation funds

• Changes to super industry levies continue to favour members of larger funds
• Members of small and medium-sized super funds pay much higher charges
• CPA Australia says members of smaller funds should not pay more to fund the regulation of the industry

CPA Australia is calling on the Commonwealth Treasury to reconsider its formula that allows superannuation funds to recover regulatory costs from members as Australians with smaller funds continue to pay more than their fair share. 

Responding to Treasury’s annual consultation on the Proposed Financial Institutions Supervisory Levies for 2025-26, CPA Australia Superannuation Lead Richard Webb said members of small and medium-sized funds appeared to have become collateral damage in an imperfect model.

“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,” he said.

“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.”

Adjustments to the Financial Institutions Supervisory Levies this year mean that a large fund with total assets of $360 billion and 3.42 million member accounts will be charged $10.3 million in 2025-26, for example, while a medium-sized fund with total assets of $9.3 billion and 26,063 members would be charged $909,000. A small fund with assets of $349 million and 2,239 members would be charged about $34,000.

For members of large super funds, based on the above example, this would mean an annual charge of $3.01, down from $3.71 in 2024-25. For members of medium-sized funds, however, an annual charge of $34.87 would apply, reduced from $39.24. For a small fund, the annual charge would be $15.26, down from $17.17.

This equates to a reduction of 18.9 per cent for large fund members, 11.8 per cent for those with a medium-sized fund, and 11.1 per cent for those with a small fund, based on the previous year’s levies.

According to industry figures, more than 1.5 million Australians hold superannuation accounts with a super fund with less than $20 billion in assets.

Mr Webb said members of smaller super funds were already bearing a higher burden of administration costs and it is unfair to further increase this with a disproportionate share of the levies required to fund the regulation of the system.

“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. 

Mr Webb is also concerned that the funding allocation for the Gateway Network Governance Body (GNGB) – which governs the Superannuation Transmission Network (STN) – was not sufficient to prepare the organisation for the much-needed investment that will be required to manage with new Payday Super requirements. 

“The levies attributable to the GNGB is forecast to increase by just $100,000,” he said. “However, in addition to an increased focus on cyber threats and data security, the GNGB also oversees the work undertaken by the STN in preparation for Payday Super. This crucial work does not appear to have been factored into this. We would have expected to see around a five-fold increase in this funding.”

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