Public superannuation funds are the best value funds as their low running costs enable them to charge lower fees than those of rival industry and public sector funds, a study has shown.
People who have a balance of $300,000 in a public fund have been charged 0.57 per cent a year on average in fees within the period from June 2005 to March 2008.
In the same period with the same amount of money, Australians invested in industry funds were charged 0.72 per cent a year.
People in corporate master trusts were charged 0.83 per cent a year and investors in personal master trusts were charged 0.94 per cent per year.
The report was compiled by Sydney-based research firm Chant West Financial Services.
Public sector funds have managed to keep their costs low because they serve a small number of employers, have low promotional costs and fund contributions are mainly conducted electronically.
“These funds have the scale to keep their operating costs down, they have all the features that most members need and their returns have generally been strong,” Chant West principal Warren Chant said.
The report showed that master trusts are costlier than not-for profit industry and public sector funds.
A person with $25,000 in a master trust is being charged twice as much as someone in an industry fund and nearly treble those with a public sector fund.
Industry funds have also increased fees each year from June 2005 to March 2008, while retail master trusts and public funds have had stable fees.
A person who invested $50,000 in an industry fund in March 2008 would be charged 0.83 per year in fees whereas investing the same amount in June 2005 would have incurred a fee 0.71 per cent.
