Older Australians slugged by now-not-so-hidden super fund fees

Super fund fees rose by 10 per cent last year, reveals finance research group.

Super fund fees rose by 10 per cent last year, reveals finance research group

With many older Australians worried about the possibility of private health premiums increasing by up to 12 per cent next year, the fact that super fund fees rose by 10 per cent on average last year seems to have gone under the radar.

Australians are paying up to $32 billion a year in super fund fees, new research from Rainmaker Information has found, with the 10 per cent increase in fees outpacing inflation by almost four-fold.

The 2018 Rainmaker Fee Study analysed more than 2500 fee options offered through 550 superannuation products representing 20 million member accounts.

It found that the average superannuation fund member is paying 1.23 per cent of their account balance in fees, up from 1.16 per cent in 2017. According to Rainmaker data, the average MySuper Total Expense Ratio (TER) is now 1.2 per cent, meaning for every $100,000 in superannuation, members are paying up to $1200 in fees – equivalent to two thirds the average household electricity bill in Australia.

Around two-thirds of those fees fund investment management, with the remaining going towards administration.

The research underlines the importance of understanding how fees work and, armed with this knowledge, fund members can shop around for better deals.

“These changes have dramatically changed the comparative sticker price fees across the market with retail funds offering many of the lowest price MySuper products available,” said Alex Dunnin, Rainmaker’s research and compliance executive director.

Mr Dunnin explained that advertised headline fees might be lower for some products, but by looking at administration and investment components separately, customers can get a better idea of where their money is going.

“Products offered by not-for-profit funds still have administration and member fees that are on average 50 per cent cheaper than retail funds, but the fees for investment offsets this advantage,” said Dunnin.

“However, investment fees vary according to what investment option the member takes up. Many funds offer low-cost index options as well as higher cost more active diversified options. Ultimately, fees – particularly investment fees – should be seen in light of net investment returns and risk.

“Despite what some super fund members may think, superannuation is now a highly competitive marketplace. If members do even a little shopping around they might be surprised how much money they can save doing something as simple as swapping their super funds.”

Do you know how much in super fees you pay each year? Have you ever looked into switching your super fund? Did you notice that your fees increased by 10 per cent last year?

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    COMMENTS

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    floss
    18th Oct 2018
    11:00am
    What fool would put their money into a retail fund a industry fund is the only way to go.Just a little burley for the greed is good gang.
    Old Geezer
    18th Oct 2018
    11:09am
    The returns on industry tell me that there are lots of fees with them as well. Cheapest one I could find for my super was over $20,000 a year. I pay less than a 10th of that on my SMSF.
    TREBOR
    18th Oct 2018
    1:53pm
    Fees are excessive for the service all round.. generally retail funds are worse.
    Old Geezer
    18th Oct 2018
    11:07am
    That's 1.2% plus as there are also lots of hidden fees with super that a fund has to make before you get a return on your money.
    Old Geezer
    18th Oct 2018
    11:12am
    How many of these super funds pay the same return for both the pension and accumulation accounts? If they have any Australian shares in the fund they should be paying more for the pension accounts. If they are not they are pocketing the franking credits. This is what Labor is really trying to hide with their non refund of franking credits policy.
    Sundays
    18th Oct 2018
    1:01pm
    Yes, my industry fund has a higher return for its pension account. OG, You might be doing well with a SMSF because presumably you have the skills to manage it yourself. However many people have these funds but have outsourced the management to a financial adviser. The fees they pay are very high, and the concept of self management isn’t really working for them!
    Old Geezer
    18th Oct 2018
    4:43pm
    Good that must be one of the rare ones.
    floss
    18th Oct 2018
    11:17am
    Wow I think I have a bight, works every time ,three in a row.
    Old Geezer
    18th Oct 2018
    11:19am
    It is spelt bite and maybe you should go fishing and catch something better.
    johnp
    18th Oct 2018
    11:44am
    Hi Floss, ignore OG, he cant bear that the Industry Funds overall give best growth for the average person !!
    Karl Marx
    18th Oct 2018
    11:46am
    ROFL
    Old Geezer
    18th Oct 2018
    11:53am
    If I couldn't have a SMSF I would not have super at all.
    TREBOR
    18th Oct 2018
    2:07pm
    Oh, I dunno - a bight is a knot * in a rope..... could well be apt the way things are going here.... though I prefer the automated guillotine for faster turnover.....


    * In knot tying, a bight is a curved section or slack part between the two ends of a rope, string, or yarn. "Any section of line that is bent into a U-shape is a bight." An open loop is a curve in a rope narrower than a bight but with separated ends. Wikipedia

    With compulsory super, OG - many on wages have no other option, so good for your single anecdote.
    Old Geezer
    18th Oct 2018
    4:33pm
    Compulsory super can be put into your SMSF too.
    TREBOR
    18th Oct 2018
    5:22pm
    Perhaps so, but you need to have one first and not many have the ready lying around.. but you go ahead.. tell us how that is not so but never explain how and why....
    Old Geezer
    18th Oct 2018
    7:18pm
    There will be lots of family SMSFs around if Labor's non return of franking credits policy see the light of day. Those already retired will be adding younger family members so contribution tax of those younger family members can be used to soak up the franking credits of the fund. You can now have six members so with 4 younger members up to $15,000 of franking credits can be used to pay their contributions tax.
    TREBOR
    18th Oct 2018
    9:54pm
    Why not just have the company pay its taxes and you pay yours, OG? What need is there to muddy the waters by bringing in dividend imputation in the first place?
    Old Geezer
    22nd Oct 2018
    11:06am
    Trebor because I prefer to pay only the tax I need to and give my money away to who I wish not let the government waste it they way they do.
    BElle
    18th Oct 2018
    1:29pm
    Opted out of Super years ago. Figured the we made little profit when compared to the amount being made by the relevant Financial Institutions. This is not withstanding the appalling incompetence of some (if not all) Superfunds. They are run for their profit - NOT YOURS. The fact that the Government obliges us to use these for out Retirement Income throughtout our working life is complicit between funds and Government - of all persuasions.
    TREBOR
    18th Oct 2018
    2:03pm
    Too true - I had my own fund back in the 1980's - through a retail fund - quickly opted out once I calculated that over its lifetime I would lose up to 70% of what I contributed in fees, charges and taxes. sure - I'd end up with a higher balance over fifty years... but not as high as if I'd invested the money myself.

    In that sense I have to agree with OG - it's his spiting of industry funds that demonstrably overall have a far better result that is the problem - and that is purely ideological.

    I figure OG thinks Thatcher was a hero for closing 83 mines that were turning a profit just to destroy the Union, and in doing so forewent the opportunity, even if the coal could not be sold immediately, to do what the Chinese now do at the other end with their market dominance over the third world of ore suppliers - stocktake it until the market will pay a handsome profit. Anyway - had Thatcher had the brains of a rabbit and kept profitable mines going instead of pursuing ideology, Britain would be far better off today. Same applies here, of course - but you can't teach fools anything about long-term planning when they are intent on smash and grab and hyena business practices (leaping on a corpse that was once a living vibrant business and devouring it)....

    Stay away from ideological stances, OG - the Unions are here to stay no matter how many gutter poor third worlders begging for any handout the current governments flood us with, and they will rise again.
    roy
    18th Oct 2018
    5:49pm
    Harold Wilson, the British Labour PM closed more coal mines than Mrs Thatcher, fact, google it Trebor.
    TREBOR
    18th Oct 2018
    9:55pm
    Were they profitable? Let's deal with the detail and not the bare statement....
    roy
    19th Oct 2018
    10:45am
    You tell me, you're the expert on all things it seems.
    TREBOR
    19th Oct 2018
    7:44pm
    I reason some things out.... diablo/olbaid and Old Geezer are our experts on all things financial and politic.... they know how to separate the thug union bosses from the thug business bosses.... I've never claimed to know everything... sometimes your help is appreciated... but hey.. you ARE roy, after all...

    I said Thatcher the Lost closed down 83 profitable mines to attack the Unions..... I know Labor these days is no better, but what was the reason for Harold Wilson closing down mines?

    It seems Russia and America were flooding the market - making probably many mines non-profitable... I said PROFITABLE... where I was born and raised coal mines were everywhere... many closed down over the years for countless reasons... over the hill from my home was an old railway embankment that used to cart coal from the mine in the hill behind us... we could walk up there and smell the coal gas from fall-ins... down the road was an old pit head...... now gone.... the property bought by the daughter and son-in-law of an old school mate... our three blocks ended at a coal lease on which nothing could be built .... and this was Australia....

    18th Oct 2018
    1:39pm
    It doesn’t matter to me how much fees I pay as long as I am getting 14% + net returns
    It’s not the fees you pay , but the quality of their wealth management
    thommo
    18th Oct 2018
    5:55pm
    Olbaid...your Super Fund must be a good one.. I'am paying .85% for the account fee, and .73% for the so called 'advice' fee, on my account balance, which translates into almost $100K over a ten year period. I am being ripped off, and I can only presume most members of super funds are.
    The government does nothing about these crooks, but what can you do, other than become a politician and have a say.
    But my fund is only returning about 7% on average (that includes the above fees - so I'am told).. There's nothing in my account statements to tell me this, but you are supposed to take their word for it.
    If I am losing this quantum of money in fees each year, then it is obviously daylight robbery by the big end of town, and our hero government must put an immediate stop to it now.
    Anonymous
    18th Oct 2018
    6:02pm
    Hi Thommo

    The returns depend heavily on the products you choose

    For example in the last 5 years I've had 80% of my portfolio in US and the EU as well as some high profile companies in Asia

    High growth in value as well as Aussie dollar slide has given me great returns

    Of course you need to be active and rebalance

    Having said that I have more outside super than within in tax free jurisdiction and in products that do not attract tax in Oz
    TREBOR
    18th Oct 2018
    1:53pm
    The current fees and costs structure fleeces everybody - most of all those with a small balance, who watch an often painfully accumulated super balance, created by part time, casual or seasonal work, steadily eaten away by costs and fees .. meaning no real gain for the contributor.

    Unconscionable and demands a complete review of retirement fund packaging and a balance below which no fees or costs may be charged.
    Not a Bludger
    18th Oct 2018
    3:26pm
    Why oh why do all you people believe everything that you read without question?

    Firstly, a Rainmaker by definition is a person (often a lawyer) who, through his/her contacts brings in substantial fees and or funds, typically for large personal commission payments.

    And, you believe a rent seeking outfit called Rainmaker - gimme a break.

    As appalling is this GoFundMe supporting publication highlighting such bodgy, self serving reports as factual.

    Old adage - a fool and his money are soon parted - how true still today - and Rainmaker want you to put your hard earned into a union thug boss controlled industry fund - for a big fee from you, of course.

    Go on, off you go then - but don’t try to get my taxpaid money to bail you out or recompense you later.
    TREBOR
    18th Oct 2018
    5:19pm
    ... like the $700Bn from Bush (W) to bail out the banks etc? I doubt it is 'we' who you need to keep your eyes on with your money..... your own government has quietly legislated such protection here, and always guarantees 'privatised' projects to the tune of hundreds of millions payable in the event it doesn't work out for them.... just another way of handing over YOUR money and mine to their mates in huge bucket loads.
    TREBOR
    18th Oct 2018
    5:23pm
    .. and those 'union thug bosses' (unlike the business thug bosses in suits) are paying to their super members MORE than the corporate vultures...
    Rae
    19th Oct 2018
    8:59am
    Unions are dead Bludger. Plenty of workers are now "contractors" on zero hour contracts just as the anti union bosses wanted. It's not a problem for these kids as they don't get Superannuation. Exactly what bosses wanted, cheap labour and no responsibility.

    Of course it may get nasty as time moves on. Some Industries will be sabotaged and some bosses might even be killed but most will get wealthier and that's all that matters isn't it.
    Some top dogs being able to skite about how successful they are and how much profit they made.

    Some of these businesses are no better than grifters anyway as you say.

    Superannuation is slowly dying as planned. The thug Union bosses are trying to keep some for workers but the Corporate thug bosses are winning I'm sure as more and more are reduced to living in poverty now the LNP has made Unions ineffective.
    Old Geezer
    19th Oct 2018
    10:11am
    Super is all but dead and Labor's proposal will be the final blow that kills it.

    All my grandkids are contractors and none put money into super but invest it themselves. Most are using any extra savings to pay off their houses ASAP as the interest is not tax deductable. We have worked out that money saved in interest is more than there is to be gained by putting money into super. Once paid off they can borrow against their houses if the wish to invest and the interest is then deductable.
    Rae
    19th Oct 2018
    1:21pm
    Very wise OG and exactly as I've advised my kids too. Saving interest is a very good idea.

    The Super Funds will need to get on top of their fees and charges as they are excessive.

    When you run your own fund and trades you can compare. Not sure why Super Funds charge so much. Too many cooks spoiling the broth I suppose.
    Old Geezer
    22nd Oct 2018
    11:04am
    I looked at the idea of moving my super and the cheapest fund I could find was over $20,000 a year in fees. Even with the loss of my SMSF franking credits it costs me less to run my own SMSF. There is probably just as much in hidden fees as well. Too expensive for me.
    inextratime
    22nd Oct 2018
    4:16pm
    $20,000 fees on a super fund ? From what you revealed as your savings in a past post, and I won't repeat it here, you would have been well as truly slugged if you paid that amount OG. Average fees on $200k super in an industry funs is around $1900 per year. That includes all admin and brokerage fees. If you want to check that ring LUCRF Super and get it from the horses mouth.
    Old Geezer
    22nd Oct 2018
    6:40pm
    Not too sure where you have to have your money for those fees but calculated their fees out at over $12,000 on $200,000.
    Mondo
    18th Oct 2018
    3:49pm
    I'm pretty certain I'm better off in my industry fund than I would have been staying with AMP or the 50% drop in capital value in 18 months I experienced from a bank with a modest lump deposit I made. But then I haven't experienced the full wrath of banks' post motality advice fees as yet either. Best retirement investment I ever made was working with a bunch of Lotto fanatics who were planning their futures and dreams on a million to one win. Instead I saved the same amount each week and each time a company floated with $2.00 shares, Woolies, banks, Amcor etc I bought whatever my Lotto savings allowed and joined all the dividend reinvestment schemes. I did the same thing with buying lunch, taking in my own and the same thing when the "walkabout with a cafe coffee" fad hit. I used some of the increase in value to pay off a mortgage on a new house years ago and what's left pays around double the aged pension with no fees and virtually no tax. The idea that most people can't save for their old age when the average spend on gambling is around $2000 a year, mobile phones$, walk-about coffee $? takeaway lunches $? multi car families etc. etc is not easy to believe. The 70% who could save would then be able to provide far better for the 30% who cant in their old age than the current reverse ratio.
    Old Geezer
    18th Oct 2018
    4:38pm
    I still have the SUN shares I bought at $2, CBA at $4.50, WBC at $3, NAB at $2.50, WPL $3.50, RHC at $1 etc. I have cashed on some of the SUN and bought 2 new cars.
    TREBOR
    18th Oct 2018
    5:20pm
    Did you pay your taxes, OG? Or manage to write off any and all profit somehow while spending it on yourself?
    Old Geezer
    18th Oct 2018
    7:21pm
    Trebor I haven't sold them yet so no tax is payable. If I keep them until I depart this mortal world my heirs can sell them and not pay tax either. Meanwhile I get lots of juicy dividends and fill my car with a smile on my face.
    TREBOR
    18th Oct 2018
    9:56pm
    Ah - I've got my eye on you....
    Rae
    19th Oct 2018
    9:04am
    Yes Cosmo pretty much the plan of most Self funded retirees. Saving a bit instead of spending everything. I've always taken out the saving first and invested it. Never miss it that way and eventually no worry about how you'll pay for anything you need and a fair few wants as well.
    TREBOR
    19th Oct 2018
    12:24pm
    So you heirs get to sell a business stuff and make money out of it, and don't pay for income? Shareholding is a business....

    Interestinger and interestinger... I can see mighty changes coming....
    Rae
    19th Oct 2018
    1:26pm
    Not TREBOR not until the punters start wising up and doing what the wealthy do. While ever close to 70% spend every cent they get it will remain tax effective to buy shares. Income is taxed. Capital gains is discounted and cashflow is what the wealthy live on and that's never taxed but should be. It's why the rich hate the idea of a transaction tax and why if we had one no other taxes would be needed.
    Anonymous
    19th Oct 2018
    2:41pm
    Wash your mouth out Rae
    What a ridiculous idea
    Will never happen because it’s just too dumb
    TREBOR
    19th Oct 2018
    7:47pm
    How so, diablo - please explain? Methinks the lady doth protest too much.......
    Anonymous
    19th Oct 2018
    8:45pm
    Not explaining anything to you
    Pointless exercise as your limited capacity will just take that piece of info and go on another tangent

    I will leave you though with the nugget “A transaction tax is not a tax on spending a tax on just moving money for spending its a tax on everything , it will cause the wheels of the economy to seize up and the whole machinery grind to halt”
    It’s economic suicide
    Old Geezer
    22nd Oct 2018
    11:02am
    Anonymous I agree it is the recipe for economic disasters as everything will just stop.
    poppy
    18th Oct 2018
    5:17pm
    Sundays, what industry fund do you use for your pension account?
    Sundays
    18th Oct 2018
    10:21pm
    QSuper which used to be only for government employees eg teachers, police officers, nurses, admin officers etc. However, they now allow anyone to join. Very responsive call centre based in Queensland. Check out their web pages if interested. All transparent.
    Old Geezer
    19th Oct 2018
    10:05am
    Returns are fairly average.
    thommo
    18th Oct 2018
    5:47pm
    Don't worry floss, old geezer is just a wet blanket and troublemaker..ignore him.
    Old Geezer
    18th Oct 2018
    7:21pm
    Me trouble maker. No way.
    TREBOR
    19th Oct 2018
    7:49pm
    OG is a mix of despot and humanitarian.... diablo The Magnificent (self-proclaimed) is our resident curmudgeon who fears any change that takes from the rorters..... (whispers) might adversely impact on his own machinations... and make him pay tax....
    Old Geezer
    22nd Oct 2018
    11:00am
    Trebor the best thing about knowing is the rules is playing the game ahead of everyone else including the pollies. I don't fear change in fact I love change as it gives me more loopholes to use.
    TREBOR
    19th Oct 2018
    7:36pm
    Good to see that our politicians and other public servants are not burdened by such trivialities as costs and fees in accumulating their super.....
    Pardelope
    24th Mar 2019
    1:00am
    My accountant has told me that recent rule changes now mean that if you die and your super goes to your estate, the ATO will tax this money. If you remove your super money before you die, it will not be taxed.

    Any further info or comments please?


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