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.
Today, Industry SuperFunds continue to be committed to offering low super fees, while maximising the retirement savings of members.
Types of fees
- Administration fee: Super funds charge an administration fee for looking after your super account, including issuing statements. Administration fees can be charged as a flat annual dollar amount, as a percentage of your account balance or a combination of both. Usually, the higher your super balance, the lower the percentage fee 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 fee: This is the fee you pay for the professional management of your investment. It 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 fee: Some super funds may charge a fee when you switch from one investment option to another – even though you stay with the same fund. Some funds may charge a buy-sell spread ( rather than a switching fee) to recover the costs incurred when buying and selling assets when you change investment options.
- Exit fee: From 1 July 2019 the law prohibits a super fund from charging an exit fee when you close your account with it.
- Advice fee: Industry SuperFunds cover the cost of simple one off advice relating to your insurance cover, investment options and contributions into your account ( referred to as intra fund advice). For more extensive, complex personal advice you will be likely charged an advice fee.
- Insurance fee: Most super funds offer their members Death, Total and Permanent Disability and Income Protection cover, each of which has its own fee or premium. Often, funds have a set default insurance option but you can apply to increase your cover or choose to decrease or remove it 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.
- Contributions fee: This is not actually a fee, but a tax your super fund pays to the government on your superannuation contributions.
See if your fees are competitive
Our Compare Funds tool can give you an indication of whether what you’re paying in fees can be considered reasonable (taking into account industry standards) when compared to Industry SuperFunds.
To see exactly how much you’re paying in fees, you will need to check your superannuation statement. However, to compare them to another fund, you will need to check both funds’ Product Disclosure Statements (PDS).
Join an Industry SuperFund
One way to help get low-fee super is to join an Industry SuperFund, which generally 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.