Unfortunately the optimism of the Mercer "dashboard", with its soothing combination of light and dark blues, didn't withstand the first click into my annual statement. The idea that I was on track for a "comfortable" retirement was only the case if I was happy to live on Pal pet food and peanuts.

And from here the complexities and failures of compulsory super quickly became apparent.

Amid an avalanche of meaningless data, I realised that making sense out of my super would require some expert advice – just the type of advice most others are unable to access, or if they can it's not cheap or always trustworthy.

Underwhelming performance

The issue was not determining how my super had performed. This was obvious. Over the last 10 years the performance had been an underwhelming 5.8 per cent per annum – 60 basis points below what the benchmark index had returned over the same period (6.4 per cent).

Angus Grigg and Lisa Murray on assignment in China. supplied

This was all the more inadequate as I had chosen the high growth option, with none of my money invested in defensive assets.

Even accounting for the global financial crisis, which decimated so-called growth stocks, my Mercer Diversified Shares Fund was in the third quartile for performance, with returns 160 basis points below the 7.4 per cent generated by the top-performing funds, says SuperRatings, an organisation that ranks the industry's performance.


SuperRatings also rated my fund below the median performance of its peers over 10, seven, five and three years, as well as the last 12 months.

Mercer disputed this point arguing, in an email, that compared to comparable funds the performance was in line with the median. "It is important to ensure you are comparing like-with-like funds particularly with funds of similar asset allocation," Mercer said.

The idea that I was on track for a "comfortable" retirement was only the case if I was happy to live on pet food and peanuts. karleen minney

Determining who is right in this argument brought me into a whole new level of complexity around fees (more of that later).

Regardless, it was still not a great result if my performance was even with or just below the relevant index, as I'm in an active fund which is supposed to deliver outperformance.

It's also worth bearing in mind that small shortfalls in performance can have a big impact over the longer term, thanks to the power of compound interest.

Every point counts

Jeff Bresnahan, chairman of SuperRatings and one of my enlisted experts, pointed out that over a 40-year working life, every 1 percentage point of underperformance can reduce a person's retirement lump sum by 40 per cent.


Even super expert Jeff Bresnahan found my fees difficult to work out. Sasha Woolley

For me, this could mean the difference between having more than $1 million in super by 2045 or the $640,000 I am currently projected to accrue.

In fairness to Mercer, its performance has picked up more recently. But with a rolling five-year return of 10.5 per cent and 9.3 per cent over the last year, it is still below the median performance according to SuperRatings.

Most tellingly perhaps, the Mercer Diversified Shares Fund has only $18.14 million under management. This is tiny in the world of funds management and suggests others are equally unhappy about its performance and have either not joined in the first place or put their money elsewhere.

Putting all this together, I feel I would have been better served putting my money in a low-fee index fund over the last decade.

Not that determining what fees I've been paying was easy.

Over the best part of a week, I have called help lines, consulted experts and read through meaningless reams of data in an effort to decipher my fee structure.

In the end I did get an answer, but only after playing the journalist card and getting Mercer to provide a breakdown of my fees and charges.


This followed many frustrating hours of trying to work it out for myself. I started in the obvious place by looking at my annual statement, which was no help at all.

Fees tangle

The opening page mentions "total fees", but this figure also includes taxes and premiums on the income protection and life insurance policy which is part of my super.

The second page talks about "membership fees", "fee rebates" and "exit fees", but this is not much good either in determining what fees I'm paying as a percentage of my assets under management – the key figure on which the industry is judged.

It's only when I got to page 8 that a little more detail was given. But once again, despite all the data Mercer presented me with, there was no single figure on fees. Instead, I was given one line item showing "indirect costs" and another saying "total fees paid".

Using my own calculations I estimated I am paying fees of between 0.7 per cent and 1.6 per cent, which is the difference between competitive and outrageous.

My super expert Bresnahan took a look at my statement and agreed it was difficult to work out what fees I'm paying.

"Disclosure of fees remains as opaque as it was 15 years ago," he said. "Your statement is inconclusive on fees, there is lots of data but not much of it is useful."


This is a staggering statement. A 30-year veteran of the industry, whose job is to rate the performance of super funds and what they charge, can't accurately determine what fees I'm paying, without spending many more hours delving through documents.

Thankfully the chief executive of Super Ratings Kirby Rappell, my second enlisted expert, was prepared to do this for me and estimated my fees were around 0.8 per cent, which is pretty competitive.

Even still, it was not entirely clear as it all depended on what deal Fairfax Media had cut with Mercer.

Corporate discount

Another expert, the third I enlisted, is Michael McAlary the chief executive of WealthMaker Financial Services. He pointed me to the product disclosure statements issued by Mercer.

This tells me my money is 53 per cent invested in international shares and 47 per cent in local equities, while laying out a fee structure for those who don't have the benefit of a corporate discount.

While I was a little grumpy about my fund's general lack of performance, I was just glad I'd had the benefit of a corporate discount.

Others are being slugged very hefty fees of around 1.5 per cent.


After a little badgering, Mercer finally confirmed my fees are less than half this amount at 0.77 per cent, which is very close to what my second expert estimated.

"We don't generally express these amounts as percentages because the Australian Securities and Investments Commission (ASIC) are very prescriptive with guidance in terms of how fees must be disclosed on statements," Mercer said.

That might be the case, but at the same time this most basic of figures is not displayed anywhere on my beautifully constructed Mercer dashboard.

"The fee structure is not transparent," said my third expert McAlary. He also noted the "manager of manager" model, which has housed my money for the last decade, is "largely obsolete".

Many managers

This is where Mercer farms out my money to different fund managers with the aim of diversifying risk. But in my case I have 27 different managers looking after my money, which effectively offers so much diversification it's very hard to achieve any performance.

Indeed, my portfolio has 12 managers for Australian equities, 11 investing in international shares, four in emerging markets and two managers for any cash sitting around.

This has given me so much diversification I feel like I've effectively bought the index over the last 10 years, even though I was seeking an active manager.


Mercer put it differently, saying I had had the benefit of an "investment portfolio which is highly diversified to mitigate investment risk, without adding additional cost".

This ignores the most obvious fact that my fund has underperformed and begs the question can I change, as many others clearly have.

The answer is yes, but once again it's not cheap.

In addition to a $135 exit fee, I must also pay the "buy/sell spread" which Mercer said could be as much as 0.8 per cent.

On my balance that means around $2,200 or the equivalent of a year's worth of fees to exit the fund.

"If you switched into any other Mercer investment option within the Mercer Super Trust, there would be no buy/sell spread incurred," Mercer said.

That's clearly designed to keep me within the Mercer family and only reinforces the fact that ignoring my super for the last 19 years has been a very costly oversight.

Despite the fee slug, I will most likely change to either a self-managed or industry super fund, but the bigger issue is that my retirement savings are looking pretty thin 25 years out. They are probably less than half what I need for a truly "comfortable" retirement, which means I either need some serious outperformance from my managers or to make additional contributions.

I'll let you know how it works out in another 19 years.