Super fees: Top 10 cheapest funds in Australia

Note: This article contains the latest available fee information as at 2 August 2013. In this article you can find the cheapest super funds and the cheapest pension funds. We update this article periodically with fee data issued by rating companies, SuperRatings and SelectingSuper.

We are often asked which super fund is the cheapest super fund in Australia. As you would expect, SuperGuide’s preliminary response is: “It depends…”. How much your super fund may charge in fees can depend on many factors, including:

  • whether you join your super fund via your employer or independently
  • what type of investment option you choose (or whether you opt for the default investment option)
  • how much insurance cover you have (if any) within your super fund
  • whether you are taking a pension from your super fund

Rating agencies, SuperRatings and SelectingSuper, regularly publish data on the cheapest super funds. In the 4 tables set out below you can discover:

  • Table 1: Cheapest super funds available for anyone to join (doesn’t include non-public offer funds)
  • Table 2: Cheapest super fund from all super funds available in Australia (some super funds are only available to employees of companies)
  • Table 3: Cheapest super fund that you can join as an individual rather than only via your employer (public offer funds joined as an individual)
  • Table 4: Cheapest pension funds

Top 10 cheapest super funds, according to SuperRatings

According to rating agency, SuperRatings, the top 10 cheapest commercial super funds available to any individual joining a super fund independently (some additional cheap super funds are only available to employees of a company, but not included in table1) are set out in Table 1 below. Specifically, the table below lists the lowest average fees payable on a $50,000 account balance for public offer funds.

You can compare the fees you pay on your super account with the fees charged by the cheapest public offer super funds in Australia.

Table 1: Top Ten Lowest Fees for commercially available super funds as at 31 March 2013
Ranking FUND NAME Fee on $50,000 Balance
1. RecruitmentSuper – SelectSuper $271
2. ANZ Smart Choice Super $300
3. First State Super $302
4. Bendigo SmartStart Superannuation Plan $313
5. RecruitmentSuper – EasyChoice $331
6. Club Plus Superannuation $363
7. AMIST Super $368
8. ING DIRECT Living Super $375
9. Energy Super $392
10. Australian Enterprise Super $396

Source: SuperRatings website (www.superratings.com.au)

Top 10 cheapest super funds, according to SelectingSuper

Rating agency, Selecting Super has conducted some handy research on the fees that super funds charge, and in generous fashion SelectingSuper regularly releases the highlights of this research for free access by the general public.

So, well done to SelectingSuper and Alex Dunnin for creating the three tables (tables 2, 3 and 4) that appear in this article. The fees listed relate to the default investment option of the particular super fund, typically a balanced or growth option. (For an explanation of balanced and growth options see the article Investment performance: We’re the best super fund. No, we’re the best…). The fee comparisons are based on a fund member earning $50,000 a year and who has $50,000 in their super fund’s default investment option.

Note: Although important, cost is not the only factor when selecting a superannuation product. High costs do eat into overall investment returns however so knowing what super funds charge in fees is important information for helping you determine the quality of your super fund or pension option.

The three tables below cover:

  • Table 2: Cheapest super fund across all types of super funds
  • Table 3: Cheapest super fund that you can join as an individual rather than only via your employer (public offer funds joined as an individual)
  • Table 4: Cheapest pension funds

Table 2: Cheapest super fund of all funds

The award for the cheapest fund in Australia goes to Australia Post Superannuation Scheme, according to SelectingSuper. If you’re a member of Aussie Post’s super fund you pay minimal fees on your super account. Unfortunately, if you’re not an employee (or a spouse of an employee) of Australia Post then forget about joining the cheapest super fund in Australia.

Many of the cheapest superannuation funds are corporate or public sector super funds which are generally only open to employees of a particular company, or the government. The fees for this type of super fund are often subsidised by the employer, as is the case for Australia Post super fund members.

The fee comparisons are based on a fund member earning $50,000 a year and who has $50,000 in their super fund’s default investment option.

Table 2: Best fee deals across all super funds

Total Expense Ratio

Rank Fund name Segment Can anyone join? TER %  TER $
1 Australia Post Superannuation Scheme Government fund No 0.12%  $62
2 Shell Australia Superannuation Fund Corporate fund No 0.39%  $203
3 State Super (NSW) Government fund No 0.42%  $216
4 Military Superannuation and Benefits Scheme Government fund No 0.43%  $224
5 South Australian Ambulance Service Super Government fund No 0.50%  $260
6 Rio Tinto Staff Superannuation Fund Corporate fund No 0.52%  $270
7 RecruitmentSuper Industry fund Yes 0.53%  $273
8 ANZ Australian Staff Superannuation Scheme Corporate Fund No 0.55%  $286
9 SA Metropolitan Fire Service Super Government Fund No 0.57%  $296
10 CBA Group Super – Accumulation Plus Corporate fund No 0.57%  $296

Table source: SelectingSuper (www.selectingsuper.com.au) Nearly all (9 out of 10) of the super funds listed in the table above are not open to all employers or individuals. According to SelectingSuper, the table represents the top 10 out of 147 superannuation products, covering all market segments. TER stands for Total Expense Ratio. Visit www.selectingsuper.com.au for more information on TER. Table represents fees as at August 2013 (with table updated by SelectingSuper in March 2013).

Table 3: Cheapest super fund that anyone can join as an individual

If you’re concerned about the fees that you pay in your existing super fund and you want to change to a super fund that your employer doesn’t currently contribute to, then generally you must join a super fund as an individual (rather than via your employer) which generally means different fees and possibly more expensive life insurance. Alternatively, you may be able to arrange for your employer to sign up to your preferred super fund which gives you access to cheaper group life insurance cover and in some instances, potentially lower fees.

The cheapest super funds for an individual actively choosing a fund are overwhelmingly industry funds, although two retail master trusts make the top 10 list, and some of the major financial organisations are launching super funds that remove the advice component built into the cost of the fund. I have not yet seen research on the comparative costs of these newish products.

The cheapest fund of all the super funds commercially available for individuals is First State Super Personal Division.

The fee comparisons are based on a fund member earning $50,000 a year and who has $50,000 in their super fund’s default investment option.

Table 3: Best fee deals for super funds that you join as an individual rather than via your employer

Total Expense Ratio

Rank Fund name Segment Can anyone join? TER %  TER $
1 First State Super Personal Division Industry fund Yes 0.60%  $312
2 Club Plus Super Personal Division Industry fund Yes 0.61%  $317
3 Bendigo SmartStart Super Retail fund Yes 0.64%  $332
4 AMP Flexible Super – Super Account Retail fund Yes 0.68%  $355
5 AMIST Personal Division Industry fund Yes 0.73%  $379
6 HESTA Super Fund – Personal Industry fund Yes 0.79%  $413
7 Nationwide Superannuation Fund – Personal Industry fund Yes 0.80%  $413
8 Media Super Personal Industry fund Yes 0.81%  $418
9 AustralianSuper Personal Plan Industry fund Yes 0.81%  $421
10 First Super Personal Division Industry fund Yes 0.82%  $423

Table source: SelectingSuper (www.selectingsuper.com.au). According to SelectingSuper, the table represents the top 10 out of 146 superannuation products that any individual can join, covering all market segments. Table represents fees as at August 2013 (with table updated by SelectingSuper in March 2013). 

Cheapest pension fund

Generally speaking, the information publicly available on pension funds is not as comprehensive as the information that exists for super accounts in accumulation phase. Fortunately, SelectingSuper has also produced a table listing ten of the cheapest pension options.

According to SelectingSuper, the table below describes the fees payable on a pension account for a fund member with an initial deposit of $100,000 and who receives 12 monthly pension payments. The money is invested in the pension products default investment option (typically a balanced or growth option).

Half of the cheapest pension funds are open to the general public. If you shop around you can expect to find a few pension offerings that charge the equivalent of around 1% of fund assets. If you want to invest your pension savings in non-standard investments (for example, emerging overseas markets or hedge fund investments) then you can expect to pay a lot more in fees.

Table 4: Best fee deals across all retirement (pension) funds

Total Expense Ratio

Rank Fund name Segment Can anyone join? TER%  TER $
1 Australia Post Super – Pension Government fund No 0.09%  $90
2 Energy Super Income Stream Industry fund Yes 0.32%  $322
3 HOSTPLUS Pension Plan Industry fund Yes 0.43%  $430
4 Club Plus Pension Industry fund Yes 0.53%  $533
5 Meat Industry Employees’ Superannuation Fund – Pension Industry Fund No 0.55%  $548
6. ANZ Smart Choice Pension Retail Yes 0.55%  $550
7 CBA Group Super – Retirement Access Corporate fund No 0.56%  $557
8 AUSCOAL Account-based Pension Industry Yes 0.57%  $570
9 GESB Retirement Income Allocated Pension Government No 0.61%  $610
10 QIEC Super Pension Industry fund Nos 0.64%  $644

Table source: SelectingSuper (www.selectingsuper.com.au). According to SelectingSuper, the table represents the top 10 out of 216 retirement products covering all market segments. Table represents fees as at August 2013 (with table updated by SelectingSuper in March 2013).

SelectingSuper also provides a very useful explanation on how super funds charge fund members. For example, if your super fund charges 2% in fees rather than 1% in fees, that 1% difference in fees over 40 years can mean a final retirement balance that is 30% lower than if you had chosen a cheaper fund, assuming investment returns are the same for both super funds.

© Copyright Trish Power 2009-2014

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.

IMPORTANT: SuperGuide does not provide financial advice. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Readers need to seek independent advice about their personal circumstances.

Comments

  1. Kathryn says:

    For those of you considering rolling over small super fund accounts into one fund please consider the TPD and Life Insurances aspects. If you rollover you may lose these insurances, should you wish to retain the insurances from your outgoing fund check with the Fund accepting incoming accounts that you may reserve these insurances. Also, when paying out TPD from superannuation, tax is payable and part of the formula to calculate the taxation is based on the ‘eligible service date’, so if you rollover an older fund account to a new fund the date utilised will be the older fund date therefore increasing the amount of taxation payable on a TPD payout held by your superannuation fund, it is always best to have a short eligible service date if you are holding TPD in super, otherwise you may have to increase the TPD insured amount to factor in the taxation which could be tens of thousands.

  2. Hi,
    I want to roll several funds into one. I have a First State Super, Media Super, AMP and Sunsuper.
    Currently I am using Media Super for contributions. As I don’t have much in all of these funds it appears to be vital to do this, but which one? For me it appears to be either First State or Media Super.
    Best return was on First State Super and fees are less ($240/admin and insurance premium).
    Media Super fees: $140/tax and admin, $443/Death and TPD) The death benefit with Media Super is $500 000 and TPD $12 200, wheras First State Super gives $120 000 for both.
    I have never looked deeply into the matter and consider myself illiterate.
    Any suggestions are welcome.
    Cheers
    Manu

  3. Help I have approx 70,000 in ioof, fees galore. I want income protection insurance and death as I will be working for the next 5 years Any suggestions? It’s all a maze!

  4. I have so many super funds and am trying to work out with one to roll into.. Recruitment super seems the best and the next ANZ.

    Any advise??

  5. Hi Please note that in one of your tables you have recruitment super and Australian Enterprise Super which has both been merged under Kinetic.
    Also, the MER for ANZ is 0.50% and is is not

    • Robert Barnes says:

      Hi Vish – Thanks for your comment. The table is information as at 31 March 2013 – we rely on SuperRatings for the data.
      Cheers
      Robert Barnes
      GM – SuperGuide

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