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Superannuation fees should be analysed by members to ensure they are getting good value for money on the management of their retirement savings.
Unaware Australians are being charged up to three per cent in fees by their superannuation fund and it could be slashing their retirement savings by tens of thousands of dollars.
New analysis released by independent superannuation research firm SuperRatings has found fees on nest eggs can range from less than one per cent to nearly three per cent.
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On a $100,000 publicly-offered balance fund the average fee cost is 1.23 per cent but fees range anywhere from 0.53 per cent to 2.93 per cent — or the equivalent of $1229 or $2930 per year.
Australian Super’s general manager for membership Paul Schroder said the government needed to implement new rules that required funds to be more open and transparent about their fee charges.
“No one should be paying more than one per cent of their balance in fees unless they are getting something special that they understand and value,’’ he said.
“If you are paying more than one per cent you are losing money unnecessarily.â€
Australian Super’s general manager of membership Paul Schroder said Australians should not be paying more than one per cent of their total balance in fees each year.Source:News Corp Australia
Fees charged by funds are complex as there are a range of different types — this includes member fees, management or investment fees, contribution fees, adviser service fees and insurance premiums.
But the Australian Institute of Superannuation Trustees chief executive officer Tom Garcia said fees shouldn’t be the only factor when determining which fund members should choose to invest their retirement savings in.
“While low fees are a contributing factor in the long term outperformance of not-for-profit funds, they are certainly not the only factor,’’ he said.
“Funds will also charge different fees depending on the investment option and what it is invested in.
“The best way to find out what fees you’re paying is to check your statement and contact your fund with any queries.â€
SuperRatings’s research manager Kirby Rappell said the key fee to watch is the administration fee — they can range anywhere between 0.2 per cent and one per cent.
“Over the last two years the market has changed and your provider may have a new product that has a cheaper version of the same product that still give you the same investment strategy,’’ he said.
Funds are required by legislation to disclose their fee charges.
SuperRatings data shows in October the median balance fund rose by three per cent and median returns for the financial year to date are 1.3 per cent.