The superannuation industry says there is a retirement savings gap - the gap between what we have saved and what we need for a reasonable lifestyle in retirement - of almost $700 billion or $73,000 per person. And it's getting bigger. In 2004 it was $452 billion.

The organisation that commissioned the research, the Investments and Financial Services Association (IFSA), wants the superannuation guarantee contribution to be increased from 9 per cent to 12 per cent.

Whether the guarantee is lifted or not is a matter for the government and parliament to decide. But if the association is fair dinkum about closing the retirement savings gap, it should act on what it can control directly - its massive and ever-growing fee-take.

For average wage earners with $200,000 in their super accounts, a 50 per cent reduction in fees would be equivalent to them having their employer contribute 11.2 per cent of their wage to their super account instead of 9 per cent, says Jeff Bresnahan, the managing director of researcher SuperRatings.

IFSA has long list of powerful member companies, the most influential of which are the big banks and insurers and their wealth-management arms - the fund managers and financial advisers. Through them they are able to help themselves to the lion's share of fees and the relatively easy money to be made from mandatory super.

A study by independent think-tank the Australia Institute late last year estimated fees and commissions cost super members more than $14 billion a year. To put that number into perspective, the institute estimated that it is equal to about half of the payments made each year though the age pension system.

In March last year, a report by Deloitte Actuaries and Consultants did some projections for fees over the next 20 years. It expects the fee-take to increase more than $84 billion (in future nominal dollars) by 2028 as the retirement savings pool grows from just over $1.1 trillion now, to almost $7 trillion.

What makes the super system such a magic pudding for the banks and insurers is that it's not that much more expensive for them to handle $2 billion than $1 billion in terms of the investment management fees, which make up about 60 per cent of the fund's total costs. The other costs, such as administration and client servicing, do rise with more members but, overall, fees charged to members as a percentage of their account balances grow more quickly than a fund's operating expenses.

In a compulsory system there is a moral argument that says the for-profit sector of the industry needs to substantially lower its fees on its high-fee products.

The federal government wants the industry to get the costs of super, on average across the industry, for workers to 1 per cent. The Cooper Review has been established partly to make recommendations on how funds can lower their costs. The average now is 1.3 per cent but many super fund members are paying much more.

Non-profit funds, which include industry funds, are among the cheapest with total costs generally at about 1 per cent. Large funds run by the big financial services firms, including some of those run by the banks and insurers, that are accessed through large workplaces, are also cheap, with average costs similar to that of industry funds.

The most expensive route is "personal" super, usually accessed via a financial planner outside of a workplace. The average cost is about 2 per cent and about 0.5 per cent of this will be commission to the financial planner.

Lower fees would have a big impact on retirement savings for even someone with a relatively modest balance. For example, someone on the average wage of $62,000 with $100,000 in super would receive an (equivalent) superannuation guarantee charge of 10.1 per cent if their fees were halved.