Note: This article contains the latest available fee information as at 31 October 2011. We update this article periodically with fee data issued by rating company, SelectingSuper.
Rating agency,
So, kudos to SelectingSuper and Alex Dunnin for creating the three tables 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 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
The three tables in this article cover:
- Cheapest super fund across all funds
- Cheapest super fund that anyone can join
- Cheapest pension fund
Note: 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.
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 no fees on your super account. You can’t beat that! Unfortunately, if you’re not 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, or in the case of Australia Post, paid by the employer.
The two industry funds that appear in the top 10 table below were originally public sector funds.
| Best fee deals across all super funds | ||||
| Rank | Fund name | Segment | Can anyone join? | TER |
| 1 | Australia Post Superannuation Scheme | Government fund | No | 0.00% |
| 2 | First State Superannuation Scheme | Industry fund | Yes | 0.34% |
| 3 | First State Super Personal Division | Industry fund | Yes | 0.34% |
| 4 | State Super (NSW) | Government fund | No | 0.38% |
| 5 | Shell Australia Superannuation Fund | Corporate fund | No | 0.41% |
| 6 | Military Superannuation and Benefits Scheme | Government fund | No | 0.42% |
| 7 | ANZ Australian Staff Superannuation Scheme | Corporate fund | No | 0.48% |
| 8 | SA Metropolitan Fire Service Superannuation Scheme | Government fund | No | 0.53% |
| 9 | Commonwealth Bank Officers’ Superannuation Fund | Corporate fund | No | 0.57% |
| 10 | Holden Employees Superannuation Fund | Corporate fund | No | 0.58% |
Table source: SelectingSuper (www.selectingsuper.com.au) Most 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 287 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 2011.
Cheapest super fund that anyone can join
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 you generally 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
The cheapest fund of all is First State Super Personal Division.
| Best fee deals for super funds that you join as an individual rather than via your employer | ||||
| Rank | Fund name | Segment | Can anyone join? | TER |
| 1 | First State Super Personal Division | Industry fund | Yes | 0.34% |
| 2 | AMIST Personal Division | Industry fund | Yes | 0.73% |
| 3 | HOST-PLUS – Personal | Industry fund | Yes | 0.75% |
| 4 | ASSET Super – Personal | Industry fund | Yes | 0.77% |
| 5 | Media Super Personal | Industry fund | Yes | 0.79% |
| 6 | Club Plus Super Personal Division | Industry fund | Yes | 0.79% |
| 7 | AMP Flexible Super – Super Account | Master trust | Yes | 0.80% |
| 8 | TASPLAN – TasPersonal | Industry fund | Yes | 0.81% |
| 9 | First Super Personal Division | Industry fund | Yes | 0.82% |
| 10 | AGEST Super – Personal | Industry fund | Yes | 0.82% |
Table source: SelectingSuper (www.selectingsuper.com.au). According to SelectingSuper, the table represents the top 10 out of 136 superannuation products that any individual can join, covering all market segments. Table represents fees as at August 2011.
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
Most of the cheapest pension funds are not open to the general public, apart from three products – offered by Energy Super, HOST-PLUS and First State Super. 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.
| Best fee deals across all retirement (pension) funds | ||||
| Rank | Fund name | Segment | Can anyone join? | TER |
| 1 | Australia Post Superannuation Scheme – Pension | Government fund | No | 0.08% |
| 2 | Energy Super Income Stream | Industry fund | Yes | 0.37% |
| 3 | HOST-PLUS Pension Plan | Industry fund | Yes | 0.44% |
| 4 | First State Super Superannuation Income Stream | Industry fund | Yes | 0.46% |
| 5 | QEIC Super Pension | Industry Fund | No | 0.54% |
| 6 | CBA Officers’ Superannuation Fund – Account Based Pension | Corporate fund | No | 0.56% |
| 7 | Meat Industry Employees’ Superannuation Fund – Pension | Industry fund | No | 0.57% |
| 8 | Government Employees Super Fund – Allocated Pension | Government fund | No | 0.62% |
| 9 | Q Super – Allocated Pension | Government fund | No | 0.63% |
| 10 | AUSCOAL Super Account-based Pension | Industry fund | No | 0.66% |
Table source: SelectingSuper (www.selectingsuper.com.au). According to SelectingSuper, the table represents the top 10 out of 213 retirement products covering all market segments. Table represents fees as at September 2011.
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.
Hi Trish – great website, easy to use and very informative. Thanks – I have sent it to several of my friends. Question: Can you explain how the new ING Money for Life plan differs from a regular annuity. It seems remarkably “person friendly”, (low fees, ratcheting upwards, but never down, goes on until one dies,etc). what’s the catch?
thanks i got the info i needed
Juliet, I haven’t been able to download a copy of the PDS but from the limited research I’ve done so far, the ING Money for Life fund is an account based pension that you can get from the providers listed above in the last table. The only way that it is like an annuity is the “guarantee payment” that it is offering which (here’s the catch) comes at a high cost. The fees on the pension are 2.75%pa to 3.15%pa which to astute investors who understand the details or seek independent financial advice is a high cost to pay for “security”.
ING provides the guarantee by paying for protection through call or put options on the market; they make money on these options, but they do deliver a level of security to their investors. Also keep in mind that now is the prime time for them to provide these products because they know how capital markets operate; they recover, always. They have NEVER failed to recover. So if you’re going to offer these products, doing it right after a crash is ideal because the demand increases. In reality risk of another drop has decreased dramatically. The question is, where were all these products back in July to October 2007 when markets were high? The irony of it all is that as soon as markets increase, demand for this product reduces but that is when risk increases. So demand for this product when markets are having returns of 20%+ like they were between 2003 and 2007 was low.
In my opinion, if you’re concerned about your capital dropping my 10-20% over a 12 month period (or more) then don’t put your money in the sharemarket. This means you miss out on returns when they come and ultimately have to spend less. It’s a sign of an uneducated investor and a lazy adviser that puts their clients into these products. If you need a security blanket when you’re investing into growth asset markets like property and shares – you shouldn’t be there in the first place. Investment advice isn’t about finding someone who can make you lots of money, it’s about finding someone who can show you how to manage risks in capital markets that do create wealth over the long term. Trish is this too long to post? Ha!
p.s First State Super’s low fees are incredible. They offer index funds too (as opposed to most industry super funds that invest money into crystal ball gazing fund managers). I just hope that they (First State Super) don’t get gobbled up by a bigger fund such as Australian Super.
Hi, Matthew. Karen Volpato, Marketing Manager from First State Super here. First State Super ($21 B prior to the merger with Health Super on 30 June 2011) is now over $30 billion and is Australia’s fourth largest super fund. And we aim to keep providing great value to members and employers.
Thanks for the information Karen. Keep fees that low and you’re going to be the largest in time.
It’s great to see an industry super fund that understands the value that index fund managers provide compared to active, high fee, crystal ball gazing fund managers (which for some reason other industry super funds seem to favor).
Hi Karen,
I’m about to leave Unisuper (mer of 0.61% – on average for high growth option) for Frist State Super purely based on fees. Is the MER likely to stay below the 0.61% for the next two to three years? As this is the main reason im joining the fund.
Thanks,
Dana