Lowest fee superannuation funds

MICHAEL LUND
Australians pay billions of dollars in superannuation fees every year so it may be worth checking what fees apply when considering the right super fund for you.

In this article we look at:

The fees you pay include those for investment management, advice and administration, which are deducted from your super balance.

The amount you pay can vary greatly depending on your age, account balance, investment type and the super fund you are with.

Australians paid out more than $8.4 billion in total fees to super funds in the financial year to June 2020, according to figures from the Australian Prudential Regulation Authority (APRA).

The biggest cost was for administration ($3.6 billion) followed by investment ($2.9 billion).

→ Read more: Super fees explained

The impact of fees on your super

The fees you pay can make a considerable difference to what you are left with in your super balance when you retire.

For example, a Moneysmart case study shows a 30-year-old earning $50,000 a year with an existing super balance of $20,000 paying fees of 2.5% could have $81,000 more in super at age 65 by switching to a fund with total fees of 1%.

So when considering a super fund, it is a good idea to take into account the fees that are charged, along with the fund’s long-term performance. Also, keep in mind the insurance and quality of advice that’s on offer can vary greatly between providers.

To help give you an idea of the fees that may be charged by various funds, the tables below display a snapshot of low-fee super funds on Canstar’s database for a range of different account balances:

  • $30,000
  • $80,000
  • $180,000
  • $500,000

For each account balance, the annual cost takes into account administration fees, investment fees and performance fees where applicable, and any other indirect costs, while the cost of insurance is not considered.

Please note that to ensure like-for-like comparison, only the default investment option from each super fund has been captured within Canstar’s database. Where there is no default, the option with the highest ‘funds under management’ and a 60–80% growth asset allocation is used, so the fees of the funds listed in the tables below are not necessarily the cheapest on the market.

Investment options that have larger holdings of defensive assets (e.g. term deposits and bonds) typically have lower fees, although the long-term returns may be less than that of a fund with 60–80% in growth assets.

Low-fee super funds for $30k super balance

The table below shows some of the super funds on Canstar’s database for someone aged 18–29 with a super balance of $30,000 and are sorted by annual cost (lowest to highest). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

To view the annual cost in fees of all super funds rated by Canstar, use our comparison tool:

Low-fee super funds for $80k super balance

The table below shows some of the super funds on Canstar’s database for someone aged 30–39 with a super balance of $80,000 and are sorted by annual cost (lowest to highest). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Low-fee super funds for $180k super balance

The table below shows some of the super funds on Canstar’s database for someone aged 40–49 with a super balance of $180,000 and are sorted by annual cost (lowest to highest). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Low-fee super funds for $500k super balance

The table below shows some of the super funds on Canstar’s database for someone aged 50-–59 with a super balance of $500,000 and are sorted by annual cost (lowest to highest). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

How to check your superannuation fees

What fees a super fund charges should be included in a fund’s product disclosure statement. Super funds are also required to report what fees they charge to APRA.

It’s a good idea to look at all the fees a fund is charging when you are comparing funds.

The fees should also be detailed on your super fund statements. If you don’t understand why a particular fee has been charged, then you should raise this with your super fund and ask them to explain in more detail.

Insurance through super

In addition to fees, you may also be charged a premium when you have insurance included within your super account.

Most super funds automatically provide some members with life insurance – typically, life cover and total and permanent disability (TPD) insurance.

Since 1 April, 2020, this is now provided on an opt-in basis for most new members who are under 25 or have a balance below $6,000.

The cost of insurance within super will typically depend on factors such as your level of cover, your age, whether you smoke and your occupation.

Premiums are automatically taken out of your super balance and you can opt out of this insurance if you want.

Be aware of more than just fees

Low fees are an important consideration, but they aren’t the only factor to think about.

For example, you may want to consider fees in conjunction with a fund’s long-term performance, as the savings gained from low fees can be reduced or even outweighed by poor performance.

It’s worth remembering that a fund’s past performance is not necessarily an indication of future performance.

Other factors to think about include the advice and insurance offerings of the fund you are considering.