Super fees fall for first time in six years

Published on
October 15, 2019
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Superannuation fees fall for the first time in six years

Gross superannuation fees have fallen for the first time in six years, down to $32 billion.

Super fund members in Australia are now paying 1.1% in fees onaverage. This is down from the 1.2% they were paying in 2018.

This is the headline result from the 2019 Rainmaker Informationsuper fund fee study that analysed fees charged by more than 500superannuation funds and 50 self-managed super fundadministrators.

Super funds are capitalising on their growth in assets undermanagement, achieving greater economies of scale and reducing costsfor their members.

"Super fund fees are approaching an average of 1%.Thesereductions show an industry shifting towards a greater commitmentto improving super for the members," said head of superannuationat Rainmaker Information, Jason Ross.

"Australia's 13.5 million super fund members stillpay $2400 on average each year in fees, the equivalent of theaverage household energy bill."

Of the 1.1% members pay in fees, 0.7% is paid for investmentfees and 0.4% for administration and product related fees, onaverage.

Members pay different fees depending on their product type:

  • Workplace funds, those used by employers, charge an average1.24%.
  • Personal funds, that members can join as individuals, charge anaverage 1.49%.
  • Retirement funds, for members who have retired, charge anaverage 1.33%.
  • Small self-managed super funds (SMSF) charge an average0.80%.

The fall in gross fees was primarily a result of retail fundslowering their fees as a competitive reaction to members movingacross to lower priced NFP funds.

In 2015 the average retail MySuper product charged 0.24% morethan NFP MySuper products. Today this gap has narrowed to just0.04%.

"After ten years of the regulators failing to makeconsiderable impacts on the super landscape, last year'sProductivity Commission and Royal Commission have already startedto prove their effectiveness."

Super funds with the biggest reductions in their MySuper TotalExpense Ratios between 2018 and 2019 were:

# Product Public offer? Segment Change in TER 2018 TER 2019 TER
1 AMP Super Direct for Business Yes Retail -0.97% 2.16% 1.19%
2 AMP SignatureSuper Select Yes Retail -0.63% 1.84% 1.21%
3 AMP SignatureSuper Yes Retail -0.63% 1.84% 1.21%
4 AMP SuperLeader Yes Retail -0.63% 1.84% 1.21%
5 GROW Super Yes Retail -0.50% 1.33% 0.83%
6 Hostplus Yes Industry -0.39% 1.61% 1.22%
7 LGS Division A Yes Industry -0.31% 1.63% 1.32%
8 ACSRF Employer Yes Industry -0.28% 1.35% 1.08%
9 IAG & NRMA No Corporate -0.25% 1.57% 1.32%
10 QSuper Accumulation Yes Government -0.25% 1.04% 0.79%
Source: Rainmaker Information
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