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Super fund fees under the spotlight

Super fund fees under the spotlight

Tim Stewart
— 1 minute read

The average total fee for a super fund that is directly available to the public is currently sitting at 100 basis points, according to a new report by Canstar.

Comparison website Canstar has released its 2015 Superannuation Star Ratings report, which analysed 67 retail and industry funds that are publicly available to consumers.

The report found that the average fee (including administration fees and the indirect cost ratio) for an average super balance of $25,000 was $257, or 103 basis points (bps).

The minimum fee for a $25,000 balance was $100, while the highest fee of the 67 funds reviewed was $732.

The average fee for higher account balances was roughly in line with the $25,000 balance: accounts with a balance of $80,000, $140,000 and $160,000 all cost 103 bps on average; while a $500,000 account was slightly cheaper at 98 bps.

For $25,000 (categorised as 'Starter') balances, fees ranged from 42 bps to 293 bps.

The ANZ Smart Choice Super product was the top rated super fund, receiving five stars and ranking first in every category apart from the $500,000 account balance ‘Wealth Accumulator’ category, where it ranked second behind AMP’s Flexible Super – Choice product.

The top five funds in the $25,000 ‘Starter’ category were ANZ Smart Choice Super, Bendigo SmartStart Super, EISS Super, First State Super Personal and ING Direct Living Super.

All five funds had a total cost ranging between 83 bps and 97 bps.

The report highlighted the destructive effect of high fees on a superannuation account balance over time, showing that a 25-year-old earning $45,000 would be $328,837 worse off by the time they turn 65 with annual fees of 150 bps as opposed to 75 bps.

“While our research found that most providers are offering competitive fees and premiums, some providers are charging substantially more than the average,” said Canstar wealth manager Paul O’Connor.

“Over time this can have a significant impact on a worker’s retirement nest egg, unless that fee is offset with a correspondingly higher return.”

 

Super fund fees under the spotlight
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