All super funds in Australia have some associated fees, but if those fees are too high, all they do is eat into your savings. So it’s important to know what you’re paying for.
If you think your superannuation fees are too high, you may want to consider a low fee super fund.
Industry super funds set up in reaction to high fees
Industry super funds were established in the 1980s by union and employer organisations who were keen to protect Australians’ retirement investments from high super fund fees and ongoing commissions that were then common in the retail superannuation market. They were the first to develop low fee superannuation for the public.
To this day, Industry SuperFunds continue to be committed to offering low super fees, while maximising the retirement savings of members.
Types of fees
- Administration/member fees: Super funds charge an administration fee for looking after running of your super account, for example issuing statements etc. Administration fees can be charged at a flat annual rate or can be calculated as a percentage and based on tiered fee structure linked to your super balance.
Usually, the higher your super balance, the lower the fee percentage that’s deducted, although the total dollar cost will increase as your balance grows. Many funds have a limit or cap on the total administration fee that can be charged.
- Investment fees: These are the fees you pay for the professional management of your investment. This fee can vary for different investment options. They are usually charged as a percentage of your super balance and may include performance fees (if performance targets are exceeded) and asset management fees.
- Switching fees: Some super funds may charge a fee when you switch from one investment option to another – even though you stay with the same fund. Industry SuperFunds generally do not charge a switching fee.
- Exit fee: If you close your account and transfer your money out of the super fund you may be charged an exit fee.
- Advice fees: These are the fees you pay for any financial advice you seek from your fund. Many Industry SuperFunds have a low or no fee for limited or personal advice.
- Insurance premium fees: Most super funds offer a range of insurance products such as Death and Total and Permanent Disability and Income Protection , each of which has its own fee or premium. Often, funds have a set default insurance option but you can choose to increase or decrease or in some cases remove your insurance cover depending on your needs.
Insurance provided through your super fund is generally cheaper than stand-alone insurance because super funds can negotiate better rates due to their huge buying power.
- Contribution Tax: This is not actually a fee, but a tax you pay the government on your superannuation contributions.
See if your fees are competitive
The only way to know if you're paying high fees is by finding out what your super fund is charging you, and comparing the cost to other similar funds. You can find this information on your super statement. All super funds should have their fees listed on their websites.
Join an Industry SuperFund
One way to help get low fee super is to join an Industry SuperFund, which offers a simple, low fee way to optimise your retirement investment. Industry SuperFunds are not only synonymous with low fees, but did you know all their profit goes back to members, not to shareholders? Think about it next time you see a bank profit announcement. Choose an Industry SuperFund here.