Explained: Understanding your Super fund’s fees and costs
Explained: Understanding your Super fund's fees and costs.
Sometimes called a 'member fee', this fee goes to your super fund. It may be a percentage (0.5%), a flat amount ($10 per month) or capped (0.5% up to $1,000 per year). This is deducted directly from your super account.
If you have more than one super fund, you could be paying multiple administration fees and not even realise!
These are the fees the super fund charges to exercise care and expertise, it is usually stated as a percentage (e.g. 0.5%). Some super funds don't charge an investment fee since the fees for investing are often included in the indirect cost ratio.
These are the fees paid by your super fund to the companies that do their investments.
For example, in a 'balanced' investment strategy your super fund will get an investment firm to invest your money in a range of assets like shares, property, bonds, and cash. The indirect costs ratio is an estimate of the total fees to pay the investment firm.
These fees can vary slightly from year-to-year as they often include performance fees (for good investing performance) and other costs associated with the investment.
Important: Like the investment fee (above), these fees can vary depending on which investment strategy you choose (e.g. growth, defensive, capital stable, etc.).
For example, two people can have the same super fund but choose different investment strategies and therefore have different yearly costs.
Example: $50,000 super balance
|Administration fee||$100 per year||PLUS|
|Investment fee||0.5% ($250 on $50,000)||PLUS|
|Indirect Cost Ratio ('growth' strategy)||1% ($500 on $50,000)||EQUALS|
|TOTAL||$850 per year|
Watch out! Here are some other fees
Some funds charge no fees to switch between investment strategies (e.g. from ‘growth’ to ‘balanced’), but some funds will. It’s normally a flat rate (e.g. $40).
Also known as ‘financial planning fees’. This can be a flat fee (e.g. $300) or percentage (e.g. 1%). Sometimes, part of these fees can be deducted from your super account (e.g. for the advice relating to your super fund). You may also be asked to pay other fees or commissions for the advice and recommendations.
These are often stated as a percentage (0.1% / 0.1%). The buy/sell spread can be used by super funds to recover the costs incurred to buy and sell investments. They are applied each time you contribute to the super fund, change investment strategy or withdraw your money.
These small costs are taken out of the money that is used to buy and sell.
You can pay for some insurance cover inside super, with the premiums deducted from your account. Some funds have default amount of cover, but the level of cover and costs might vary.
For example, you may have default level of life insurance cover inside super. If you have multiple super funds, you may be paying for many different policies!
Some funds also charge you for leaving them, this is deducted from your account when you leave. It can be a flat rate (e.g. $50) or percentage (0.2%).
Often, these are fees for specific actions taken by members, like information requests in a family law agreement, contribution splitting or a failure to make payment. Sometimes, these are paid from your super account, other times you (or whoever requests the information) must pay for them out of your own pocket.
Common Questions About Super
The best way to tell if you are paying too many fees and costs for super is to compare it with other super funds.
Look at your current strategy (e.g. ‘balanced’) and compare it to another super fund using a similar strategy (e.g. ‘balanced’). Does your fund charge more or less? Remember, small differences now can make a HUGE difference when you retire.
When you compare super funds, remember that the fees can vary from one super fund to the next because the investment strategy may be different. Make sure you are comparing apples (the cost of a ‘balanced’ strategy) to apples (the second of another ‘balanced’ strategy).
In addition to fees and costs, you should also consider if the new fund offers the same, better or worse features.
How to compare
You should be able to find all the information you need — and an example of the fees and costs — in your super fund’s PDS.
To find the PDS, do an internet search for: “[your super fund’s name] PDS“. Then, search for a competitor fund to compare: “[super fund #2 name] PDS“.
Are your fees lower or higher?
Compare it to another fund.
Remember, this is your future we’re talking about.
You should be able to find all the information — and an example of the fees and costs — in your super fund’s PDS.
To find the PDS, do an internet search for: “[your super fund’s name] PDS”. Then, search for a competitor fund to compare: “[super fund #2 name] PDS”.
If your super fund allows you to pick and choose which shares, Exchange Traded Funds (ETF) and Listed Investment Companies (LIC) you want to buy, you may pay other fees, like brokerage. Brokerage is usually stated as a flat rate for small amounts ($20 for investments up to $10,000) or as a percentage for large amounts (e.g. 0.1% for investments over $100,000).
In addition, ETFs and LICs may charge yearly management and/or performance fees.
It’s smart to read the Product Disclosure Statements or visit the ETF/LIC operator’s website before investing so you understand the strategy and fees for the investment.
You should be given at least 30 days’ notice by your super fund if they intend to change their fees.
Test Your Knowledge
Jenny Jingle's super fund charges 2% in yearly fees (including investment fees, administration and indirect costs). Billy Bob's super fund charges 1.75%. Whose super fund is better?
High fees and costs inside super can have a huge (bad) impact on your retirement savings. However, there is no way to know for certain if Jenny's super fund is better than Billy's - we need more information.
Max Masters asks you what a 'switching fee' is. You (correctly) reply:
Sometimes (not always), your super fund might charge a 'switching fee' to change investment strategies.
Your friend, Devon Delirious, told you that he read on a blog, "super fund buy/sell spreads are the new alternative to peanut butter." Devon...
A super fund's buy/sell spread is used to recover (from members) the costs incurred by the super fund to buy and sell the investments. It is typically stated as a percentage.
Greg Grasshopper is known for bouncing from one super fund to the next. How could Greg compare the fees and costs of different super funds?
The best way to tell if you are paying too many fees and costs for super is to compare it with other super funds. Look at your current strategy (e.g. 'balanced') and compare it to another super fund using a similar strategy (e.g. 'balanced'). Does your fund charge more or less?
Share your Results :
Share your Results :
Please share this quiz to view your results.
Sign Up For The Rask Newsletter (FREE)
000-017 000-080 000-089 000-104 000-105 000-106 070-461 100-101 100-105 , 100-105 , 101 101-400 102-400 1V0-601 1Y0-201 1Z0-051 1Z0-060 1Z0-061 1Z0-144 1z0-434 1Z0-803 1Z0-804 1z0-808 200-101 200-120 200-125 , 200-125 , 200-310 200-355 210-060 210-065 210-260 220-801 220-802 220-901 220-902 2V0-620 2V0-621 2V0-621D 300-070 300-075 300-101 300-115 300-135 3002 300-206 300-208 300-209 300-320 350-001 350-018 350-029 350-030 350-050 350-060 350-080 352-001 400-051 400-101 400-201 500-260 640-692 640-911 640-916 642-732 642-999 700-501 70-177 70-178 70-243 70-246 70-270 70-346 70-347 70-410 70-411 70-412 70-413 70-417 70-461 70-462 70-463 70-480 70-483 70-486 70-487 70-488 70-532 70-533 70-534 70-980 74-678 810-403 9A0-385 9L0-012 9L0-066 ADM-201 AWS-SYSOPS C_TFIN52_66 c2010-652 c2010-657 CAP CAS-002 CCA-500 CISM CISSP CRISC EX200 EX300 HP0-S42 ICBB ICGB ITILFND JK0-022 JN0-102 JN0-360 LX0-103 LX0-104 M70-101 MB2-704 MB2-707 MB5-705 MB6-703 N10-006 NS0-157 NSE4 OG0-091 OG0-093 PEGACPBA71V1 PMP PR000041 SSCP SY0-401 VCP550 70-532 102-400 101-400 350-080 1Z0-051 NSE4 AWS-SYSOPS 000-104 ITILFND 220-901 000-105 210-260 70-980 300-208 300-135 640-916 2V0-620 AWS-SYSOPS 74-678 70-463 SSCP 350-080 MB2-704 MB2-704 MB5-705 70-483 1Z0-061 000-105 200-125 ,