Retirement
Super fund fees finally drop
Gross superannuation fees have fallen for the first time in six years, meaning super fund members are now paying 1.1 per cent fees on average, down from the 1.2 per cent they were paying in 2018.
Super fund fees finally drop
Gross superannuation fees have fallen for the first time in six years, meaning super fund members are now paying 1.1 per cent fees on average, down from the 1.2 per cent they were paying in 2018.
The 2019 Rainmaker Information super fund fee study has analysed the fees charged by more than 500 superannuation funds and 50 self-managed super fund administrators in its new report.
According to the financial services information provider, super funds are capitalising on their growth in assets under management, achieving greater economies of scale and reducing costs for their members.
Head of superannuation research at Rainmaker Information Jason Ross said “super fund fees are approaching an average of 1 per cent”.
He commented that the reductions show an industry shifting towards a greater commitment to improving super for the members.
Despite the recent drop, he did flag that “Australia’s 13.5 million super fund members still pay $2,400 on average each year in fees, the equivalent of the average household energy bill”.
Rainmaker found that of the 1.1 per cent portion of their super fund that members are paying in fees, 0.7 per cent is paid for investment fees and 0.4 per cent is for administration and product related fees, on average.
It also noted different fees were prevalent dependent on the super product type with which an individual was aligned:
- Workplace funds - used by employers - charge an average 1.24 per cent.
- Personal funds - that members can join as individuals - charge an average 1.49 per cent.
- Retirement funds - for members who have retired - charge an average 1.33 per cent.
- Small self-managed super funds charge an average 0.80 per cent.
According to Rainmaker, the fall in gross fees was primarily a result of retail funds lowering their fees as a competitive reaction to members moving across to lower priced not-for-profit (NFP) funds.
It said that while the average retail MySuper product charged 0.24 per cent more than NFP products in 2015, the gap has now narrowed to just 0.04 per cent.
From Mr Ross’ perspective, “after 10 years of the regulators failing to make considerable impacts on the super landscape, last year’s Productivity Commission and royal commission have already started to prove their effectiveness”.
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