Generally, your employer must pay at least 9.5% of your annual salary into your super account in addition to paying your salary. These contributions accumulate over time and are invested by your super fund with the purpose of helping provide a comfortable retirement. According to the Association of Superannuation Funds Australia (ASFA), a couple aged around 65 – who own their own home and are relatively healthy – would need to budget to have $60,604 per year in retirement to live comfortably.
And when it comes to the difference lower fees could make to your super balance when you retire, a MoneySmart case study suggests that a 30 year-old earning $50,000 per year (with an existing balance of $20,000) could have $81,000 more in super at age 65 by switching to a fund with total fees of 1% instead of 2.5%.
So, when considering super funds, you may want to take into account the fees that are charged, along with other factors like the fund’s long-term performance, plus other features such as the insurance that’s available within the fund and the quality of advice on offer from the provider.
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:
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 results below are based on a super balance of $30,000 for someone aged 18-29 and are sorted by annual cost (lowest to highest).
To view the annual cost in fees of all super funds rated by Canstar, use our comparison tool:
The results below are based on a super balance of $80,000 for someone aged 30-39 and are sorted by annual cost (lowest to highest).
The results below are based on a super balance of $180,000 for someone aged 40-49 and are sorted by annual cost (lowest to highest).
The results below are based on a super balance of $500,000 for someone aged 50-59 and are sorted by annual cost (lowest to highest).
The results below are based on a super balance of $1,500,000 for someone aged 60+ and are sorted by annual cost (lowest to highest).
What fees are usually charged by a super fund?
There are a range of fees typically charged by superannuation funds:
- Administration fees
- Investment fees
- Performance fees
- Other indirect costs
- Insurance fees
Administration fees cover general fund operation and administration costs, typically covering the provider for administrative tasks like sending annual statements to the fund’s members. Administration fees can be charged as a percentage of your overall balance, as a specified amount (which could vary depending on your balance), or will often be a combination of the two.
The investment fee covers the management of the investment option where your super is invested. This fee can vary based on your choice of investment and is usually charged as a percentage of your overall balance.
The investment fee is typically subtracted from the investment returns before the returns are added to your account, so it’s likely you wouldn’t notice it as missing if the fund didn’t point out how much performance was reduced due to this fee.
The performance fee is the fee charged in addition to the investment fee when the fund manager exceeds the target performance for the year. As with the investment fee, the performance fee is subtracted from the investment returns before the returns are added to your account.
Other indirect costs
As well as the fees outlined above, there are additional fees that may be charged to be aware of, including:
- Switching fees, if moving from one investment option to another;
- Exit fees, which may be charged if withdrawing all or part of your super, or if transferring your super to another super fund;
- Advice fees, which may be charged when you obtain advice from your superannuation provider. This could be for a range of needs, such as choosing an appropriate investment option, deciding on a suitable level of insurance cover, or looking at what type of retirement lifestyle you can afford.
Insurance through super
The most common additional fee relates to when you have insurance included within your super account. Within your superannuation, it is possible to hold a combination of life insurance, total and permanent disablement cover and income protection. Your super fund may have automatically provided you with “default” cover, or you may have applied for “tailored” cover. In either case, there are additional charges for this cover.
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. Although 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.
Our list of top performing super funds may help you get an idea of which funds on Canstar’s database have historically performed well. Or, you can compare the fees and features of all the various super funds on Canstar’s database.