Does your super fund charge you too much?

Comparing super fund fees is no easy task if you want to shop around for the best value. But in the fallout from the banking inquiry, it is worth the effort to try to find out.

Fees strip returns

As the financial services sector royal commission turns its gaze to superannuation funds, revelations are emerging about the huge fees some fund managers gouge for little to no service.

Comparing super fund fees is no easy task. Some comparison sites have even taken down their data as they tighten up their own due diligence in the wake of the commission’s probe.

Ratings site Canstar lets you compare the total fees (excluding insurance premiums) for 73 funds. Spokesman Steve Mickenbecker told YourLifeChoices some funds are not included because they are too small or may have other factors that could influence their ability to comply with requirements.

“We are not associated with any of the funds, although we do provide links to some so you can click through for further information,” Mr Mickenbecker said.

The site offers star ratings based on a number of factors, such as the rate of return, and not just on the level of fees charged.

He said it was important for users to take the star ratings into consideration along with the fees charged.

“Take a balance of $180,000, for instance. The lowest fees of the funds we review are charged by Bendigo Bank on $890. The highest fees recorded, more than $4400, are charged by a Perpetual fund.

“If you look at how we rate them, based on several metrics, Bendigo gets four stars while Perpetual gets just two stars.

“Super fund members paying too much in annual costs really ought to take stock, because high fees can hurt your returns. This is a concern being bourne out by the royal commission,” Mr Mickenbecker said.

SuperRatings’ site is undergoing a rebuild in response to the royal commission findings so far. However, chief executive Kirby Rappell said generally, a fund member should not expect to pay more than $800 a year in fees.

“The MySuper average fee is $621 and the Industry average is $708,” Mr Rapell said.

“Historically, some funds charged contribution fees (fee on each amount contributed). These are no longer allowed under the Future of Financial Advice reforms; however, they have been retained on some legacy products under grandfathered provisions – keep an eye out for these.” rates more than 350 funds, but making comparisons on the basis of fees is not so easy on this site.

The Australian Prudential Regulation Authority (APRA) analyses all funds’ financials periodically, but a pure comparison using its spreadsheet data is still elusive.

Take, for instance, information in Table 6 of APRA’s Annual Fund-level Superannuation Statistics issued in March 2018. It outlines a variety of fees that are levied by funds, including for investment, administration, advice, insurance, exit, switching, activity and others.

But unless you are willing to put in a fair bit of work to calculate the average fees paid by members, the data is virtually meaningless.

The Government’s Moneysmart website lists six comparison websites that contrast super funds, but warns that they do not always use consistent metrics, nor do they cover the full gamut of available funds.

No doubt, the fallout from the royal commission will eventually go some way towards reforming a sector that has been shown to charge exhorbitant fees.

Hopefully, this reform will be informed by the Productivity Commission draft report into the super sector released in May.

Are you surprised that the Government and regulators have been so slow to realise that some super funds have been charging higher fees than they should have? Will you shop around for a fund with lower fees?



    To make a comment, please register or login
    9th Aug 2018
    A friend of mine has been charged $10K per year to manage his pension super fund. Roughly $5K is charged for an account keeping fee (just like a bank charges on your account) and roughly another $5K for an advice fee (ask for advice anytime).
    This average of $10K over 10 years amounts to $100K. No one can afford to lose that in retiremenyt.
    But these charges are exhorbitant, and he has recently opted out of the Advice aspect of the fund, and so doesn't have to pay that fee, but he is on his own as far as seeking any advice as to his investment in the super fund.
    These super funds are ripping people off and the govt lets them get away with it.. Why, because they are looking after the big end of town...mongrels.
    9th Aug 2018
    A few years ago I was lost well over half of my super which was then with MLC.
    MLC were still charging me thousands of dollars each year whilst losing over $100,000 of my superannuation fund.
    My financial adviser closely tied with MLC did nothing.
    A lot of funds were locked in and could not be extracted till many years later at a huge loss.
    I consider that the whole private superannuation scheme started by Keating has been a massive loss to all working Australians not just me.
    Of course the money was not really lost but ended up making some other companies and share traders even richer
    I dare and challenge the government and independent committees to calculate and publically declare the total money loss to all the Australian superannuation contributors over the last 10 years.
    I strongly suggest superannuation be allowed to go into the Australian Future fund which has done so much better than any and all of that bunch of merchants pirates who lied and called themselves good superannuation companies on TV whilst I and other were losing billions.
    9th Aug 2018
    "massive loss to all working Australians"

    You can't say that, my super has been wonderful, would never have saved the money if I had to do it myself.

    Sure the balance dropped markedly with the GFC (250k to 160K) but recovered later and is now well ahead.
    9th Aug 2018
    g.c why wonder, australian future fund is run by a mr. peter Costello, a liberal, named to be the greatest treasurer of any Australian, liberal or labor government, the same liberal government you attempt to discredit at every opportunity in these columns, you play a different drum however when it hurts your own pocket
    9th Aug 2018
    This article helps where to look for a comparison of various funds as what they charge. I would think all investors should be entitled to know how much amount they are paying for the service they receive, from Financial Advisor since they are the direct contact. The total fee analysis, at least annually if not six monthly, should include ALL FEES paid by the investors, i.e. i. paid to adviser, ii. Wrap account provider (or equivalent), iii. Fund Manager for managed funds and any other transaction costs. I hope more investors would insist that their advisers on disclosing such actual fees paid by them.

    9th Aug 2018
    The FSRC findings will be of interest and it's a safe bet that the fee structures in a lot of super funds will be reviewed. Just as AMP and some banks were forced to take action after disclosures, some super funds will also make adjustments prior to a full report of the FSRC.
    9th Aug 2018
    The super funds each have different cost structures for different super accounts. For example a growth account will cost more, generally, than a capital stable or cash account. Funds must be compared on a like-for-like account basis for both costs and returns before making a decision. This requires careful study of their product disclosure statements, which can all be downloaded on-line. The funds don't make it easy, but the investment of time is crucial as costs and returns, and the associated investment risk profiles between funds for different super accounts, can be substantial. I know, because I spent hours and hours downloading product disclosure statements and digging through them to obtain the different cost and return structures, and the different investment risk profiles, of the major super funds. I then checked my calculations with the funds directly, by phone, to make sure I had the details right. One of the important issues regarding costs is that in those years when account returns are low or even negative, investors do not want their balances depleted by high fees and charges, which do not reflect the performance of their fund. I was truly surprised at the differences in costs between funds for similar accounts, as well as the differences in costs between accounts within the same fund. You must check it out for yourself. You really must. But I warn it will not be easy: costs are often buried in different places within the product disclosure statements, and the formats for presentation also differ substantially between funds.

    9th Aug 2018
    As long as my retail fund keeps giving me above average returns , their fees don’t matter much
    15% average return in the last 5 years - can’t complain
    9th Aug 2018
    olbaid I would not complain either, I got my own smsf and the returns are give or take 13% to 14%, however any fees are going in my pocket not in the pockets of those so-called experts who are fleecing the funds.
    9th Aug 2018
    Super is all spent, but remember seeing the printout and all the fees deducted.
    They take advantage of working people who are too busy to get bogged down checking everything.
    9th Aug 2018
    I was talked into starting a super fund in the late 70s via Australian Eagle. Projections indicated that my monthly contribution would secure $200,000 by year 2000. The fund changed hands to Telford and then MLC. In 1992 I checked it out and found that the $30,000 in the fund was less than I had contributed. Immediately pulled it but continued the life insurance part. Premiums increased every year and was worth $5k on death if I died before 75 when it expired. Ned Kelly was innocent in comparison.
    9th Aug 2018
    Many of us have been there - 'come in spinner' was the saying then. But we believed in the integrity of the spruiker in those days.
    9th Aug 2018
    now most believe in those wearing a tie and a hat and don't forget the sunglasses, eyes movements may give you away

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