Low Fee Super Funds On Canstar

With Australians paying billions in superannuation fees every year, it is worth checking the fees that apply when considering the right super fund for you. 

Generally, your employer must pay at least 9.5% of your annual salary into your super account in addition to paying you your wages. 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 would need an estimated $1.1 million in super in order to retire comfortably (approximately $58,400/year).

Online investment service Stockspot states a high-fee super account could cost you up to 27% of your retirement balance, while research from Canstar in 2016 found the highest fee super accounts could shrink your retirement balance by more than $200,000 (assuming assuming everything else is equal and an $80,000 starting balance), unless that higher fee is offset with a correspondingly higher return.

So, when considering super funds, fees are an important consideration in conjunction with long-term performance, as well as other desired features such as insurance offerings and the quality of advice on offer. The tables below display five low-fee super funds on Canstar’s database for five different account balances:

 

Compare Superannuation

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 FUM 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 are often 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).

 

Lowest annual-cost super funds on Canstar ($30k super balance)

  • ANZ Smart Choice Super (1990s): $212
  • Virgin Money Super (1989 – 1993) : $235
  • Bendigo SmartStart Super (Growth Index Fund): $236
  • EISS Super (Conservative Balanced): $246
  • Suncorp Brighter Super (1990 – 1994): $291

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

Compare Superannuation Funds with Canstar

Low-fee super funds for $80k super balance

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).

 

Lowest annual-cost super funds on Canstar ($80k super balance)

  • Bendigo SmartStart Super (Growth Index Fund): $466
  • ANZ Smart Choice Super (1980s): $498
  • Virgin Money Super (1979 – 1983) : $530
  • EISS Super (Conservative Balanced): $656
  • AMP Flexible Super (Choice): $665

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

Compare Superannuation Funds with Canstar

Low-fee super funds for $180k super balance

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).

 

Lowest annual-cost super funds on Canstar ($180k super balance)

  • Bendigo SmartStart Super (Growth Index Fund): $926
  • ANZ Smart Choice Super (1970s): $1058
  • Virgin Money Super (1969 – 1973) : $1120
  • AMP Flexible Super Choice (Balanced): $1365.60
  • AustralianSuper (Balanced): $1428

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

Compare Superannuation Funds with Canstar

Low-fee super funds for $500k super balance

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).

 

Lowest annual-cost super funds on Canstar ($500,000 super balance)

  • Bendigo SmartStart Super (Growth Index Fund): $2298
  • ANZ Smart Choice Super (1960s): $2850
  • Virgin Money Super (1959 – 1963) : $3008
  • AMP Flexible Super Choice (Balanced): $3605.60
  • AustralianSuper (Balanced): $3828

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

Compare Superannuation Funds with Canstar

Low-fee super funds for $1.5m super balance

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).

 

Lowest annual-cost super funds on Canstar ($1,500,000 super balance)

  • Bendigo SmartStart Super (Growth Index Fund): $6398
  • QSuper (Sustain 2): $8200
  • ING Living Super (Growth): $8560
  • ANZ Smart Choice Super (1950s): $8600
  • Virgin Money Super (1949 – 1953) : $8758

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

Compare Superannuation Funds with Canstar

What fees are usually charged by a super fund?

Overall, there are four key fees charged on superannuation funds:

  1. Administration fees
  2. Investment fees
  3. Performance fees
  4. Other indirect costs

Administration fees

Administration fees cover general fund operation and administration costs, typically covering the provider for administrative tasks as 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.

Investment fees

The investment fee covers the management of the investment option within which 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.

Performance fees

The performance fee is the fee charged in addition to the investment fee when the fund manager of the investment option within which you have your funds invested 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

In the same manner as investment and performance fees, other indirect costs are costs paid by your super fund that reduces the investment returns they add to your super account. These costs are paid to external providers, often investment managers.

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 for you, 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 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 will be additional charges for this cover, as would be expected when holding insurance outside of super. One of the main differences is when it’s held within super, it typically doesn’t have the same impact on your hip pocket given the cost of insurance is subtracted from your super account balance.

Be aware of more than just fees

Low fees are an important consideration, but they aren’t the only factor to think about. In particular, low fees need to be considered in conjunction with long-term performance as the savings gained from low fees can be reduced or even outweighed by subpar performance. Other factors that are important to you may also need to be given consideration, such as the advice and insurance offerings.

To find a fund with a history of strong performance, why not start with our list of top performing super funds? You can also compare the fees and features of various super funds with Canstar.

Compare Super Funds with Canstar

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