My partner started a retirement security plan with National Mutual (then AXA and now AMP) in 1981 when he commenced empkoyment at 19.Now, 40 years later, the account balance is $80000.The fees are very high, however, there is also an exit fee of currently over $6000 payable if he was to change funds.Did the Royal Commission look into this exit fee rip off.Would he be better to transfer funds to a good industry super fund and suck up the exit fees.He is not working at the moment, but we will have some money to put into super when our investments mature just aftwr his 60th birthday.
There is a ban on charging exit fees on superannuation products coming into force from 1 July 2019, it’s part of the ‘protecting your super package’.
You’ll need to check the exit fee again from July to see if this particular product is caught by it.
In terms of ongoing fees, yes an industry fund is likely to be cheaper but if you are going to loose so much of the balance in an exit fee the switch may not be worth it. Typically the type of product you refer to has a decreasing exit fee so it will become less in time.
Hope this helps.
All the best.
I agree with what James has said, however, I will add that I have done the calculation on a fair few of these products and it does often work out better cop the exit fee now and achieve better returns in a lower fee product.
But, you just need to know what the exit fee is and how long it remains, what the ongoing fees are for this, and an alternative product, make some fair assumptions on returns and do a comparison.
But definitely wait and see if the exit fee still applies after 1 July.
These products are near on criminal and I do feel for those who were told lies to invest in them in the first place.