Less fees can mean more super
All super funds charge fees and costs, though some less than
others. Generally, a super fund with low fees and costs will build
your savings faster if it invests in the same assets. You'll need
to weigh up fees and costs against other important factors like
risk, likely returns and services before you choose a super
What fees and costs can super
There are many different types of fees associated with your
super fund. Fees are typically deducted from your account on a
regular basis at the end of each month or when an action is taken.
Super fees can be either a dollar amount or a percentage.
The main types of fees are:
- Administration fees - General
administration fees to cover the cost of operating the fund and
keeping your super account.
- Investment fees - Fees for managing your
investment which can vary for different investment options.
- Indirect costs - Costs paid by your super
fund to external providers that affects the value of your
investment. Typically these are costs paid to investment
- Advice fees - Fees for personal advice
provided about your super and other investments. Your adviser may
also receive fees and commissions for certain investments they
recommend to you and these are not included in product disclosure statements (PDS) by the super fund.
- Switching fees - Fees for changing your
investment option within the fund.
- Buy/sell spread - This is a fee that you may
pay every time you make a transaction, including making a
contribution, switch and withdrawal. The fee covers some or all of
the cost of transactions entered by the fund.
- Insurance premiums - The cost of
insurance provided through your super fund. Many super funds have a
set default insurance option. You can usually choose to lower or
increase your level of cover based on your needs.
- Exit fees - A fee for leaving the fund.
- Activity-based fees - These fees are only
charged if your super fund provides you with a particular service,
for example, a family law split fee, where you're charged to split
your super following a separation and family law court order.
A 1% difference in fees now could be up to a 20% difference in
Check your annual statement to see if
you're paying for financial advice. Make sure you are happy with
what you are paying. If you are not happy or unsure about any fee,
contact your super fund and consider asking how you can stop these
fees being deducted.
Super funds may offer other services which may attract special
fees. Refer to your super fund's website or read the fund's product disclosure statement for
Case study: Gerri chooses lower super fees
Gerri is 30 and earns $50,000 per year as a librarian. She
already has $20,000 in her super. After shopping around for another
super fund, she changed to one with only 1% total costs and no
buy-sell spread which invests in similar assets. Her old super fund
charged 2.5% with no buy/sell spread.
By changing to a super fund with lower fees, Gerri will have
$81,000 more in her super when she retires at age 65. Her super
account balance will be $336,000 instead of $255,000.
Changes to how super funds
report fees and costs
Super funds must report the fees and costs they're charging you
in the PDS and in your annual statement.
From 30 September 2017 super funds are required to report their
fees and costs differently. Some funds have already started. These
changes are designed to make the information you receive more
accurate and consistent.
As super funds adapt to the new way of reporting fees and costs
you may see changes in the amounts reported in the PDS and your
annual statement. This does not necessarily mean you're being
charged more, but rather what's being reported to you is more
In some cases, for example, if your fund invests in private
equity or property, the fees may appear higher. These types of
assets can have higher fees and costs but may also have higher
expected returns over the long term.
If you see changes in the fees reported in the PDS or annual
statement you can ask for more information from your fund to
understand the changes.
How to tell if you're paying high
fees and costs for your super
The only way to know if you're paying high fees and costs is to
find out what your super fund is charging you, and compare the fees
and costs to other similar funds.
In addition to comparing fees and costs, weigh up other
important things including returns, risk and the services the fund
provides. Find out more about how to choose and compare super
How to compare super fees
Comparing the fees and costs on your super fund with those of
other funds can help you decide on a fund that's good for you. The
expected returns on your investment are also important as well as
how much risk you are taking. The best way to compare the fees and
costs is by looking at the fee example shown in the PDS your super
fund has sent you.
MySuper accounts generally have lower fees and costs and can
only charge certain types of fees. If you're looking for a low fee
option talk to your super fund about whether a MySuper account is
right for you.
However, it does not make sense to compare
funds that are quite different just on the basis of fees and costs.
For example, funds that have a lot of property or private equity
may have higher costs but they are likely to have different levels
of risk and expected return, compared to funds that have more cash
and fixed interest investments.
Some superannuation funds offer platforms for you to choose your
investments. These platforms may have lower fees and costs in their
PDS because the figures there just cover the fees and costs of the
platform. This type of investment might suit you, but it is not
necessarily cheaper when you take into account fees and costs that
are being charged inside the investments on the platform's
Compare the impact of fees on your super fund.
super you have will determine the kind of lifestyle you'll have
when you stop working. Choose a fund with low fees and you may end
up with a fatter nest egg.
Last updated: 24 Oct 2018