Could you be in a cheaper super fund?

Article published 27 October 2021

Could you be in a cheaper super fund?

SUPER is getting cheaper, although annually total fees paid by Australia’s 13.5 million super fund members still nudge $30 billion.

But average super fund fees dropped one per cent during last financial year, according to financial information group Rainmaker.

Rainmaker noted that this reduction happened “despite a ten per cent rise in superannuation savings last financial year and record-breaking investment returns”.

In other words, super funds are becoming less dependent on commission-based fees. They’re starting to charge to recover expenses plus a fee for their trouble of managing your super.

According to Rainmaker “super funds are working hard to become more efficient and lower their costs, but at the same time white-hot competition and regulatory scrutiny is forcing them to cut their fees as fast as they can”.

This is good news for the vast majority of working superannuation fund members who are too busy to worry much about their super. They generally are members of MySuper funds. These are funds employers pay contributions into on behalf of members who haven’t chosen a fund themselves. MySuper funds are default funds.

Even these are lowering their fees. This is likely to continue as non-performing MySuper funds are forced out. Their member balances will be transferred to MySuper funds that do perform.

Six in ten default MySuper funds cut their fees in 2020/21, according to Rainmaker.

But on average, they are still not as cheap as the best retail and industry funds where members have actually made a choice to have their contributions paid into these funds.

The moral is: it always pays to pay attention.

While industry-wide fees averaged one per cent, fees for the best default MySuper sector averaged 1.08 per cent after falling from 1.13 per cent in 2020.

Also, the fee gap between not-for-profit funds and retail funds is closing fast with the average total expense ratio for not-for-profit and retail funds now being almost identical, at 1.07 per cent and 1.08 per cent respectively.

The table below lists the lowest-cost default MySuper funds. AMG Corporate, which is on this list, operates AMG MySuper, which is an officially non-performing MySuper fund. While AMG MySuper may be cheap, it might be a good idea to switch to one of the others after checking their performance out.

Better still, find a fund that gives you the best return after fees!

 

10 lowest cost MySuper products open to the public in 2020-2021

 

Ranking MySuper product Total expense
1 UniSuper 0.65%
2 Bendigo SSSE 0.70%
3 AMG Corporate 0.70%
4 Virgin Super Employer 0.73%
5 QSuper Accumulation 0.74%
6 Suncorp ESB 0.77%
7 AustralianSuper 0.77%
8 AMIST Super 0.81%
9 Rest Super 0.89%
10 EISS Super 0.89%

The MySuper funds that failed the first annual performance test are:

  • AMG MySuper
  • Balanced (MySuper)
  • MySuper Balanced
  • MySuper Investment Option
  • BT Super MySuper
  • VISSF Balanced Option (MySuper Product)

For more information please call our media contact on 0410 612 182 or contact us