Note: This article contains the latest available fee information. In this article you can find the cheapest super funds and the cheapest super pension funds. We update this article periodically with fee data issued by SuperRatings, and for pension funds, by SelectingSuper. Latest update was August 2016, using March 2016 SuperRatings data.
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
Ratings agency, SuperRatings, regularly publishes data on the cheapest super funds. While ratings agency, SelectingSuper, publishes data on the cheapest super funds and cheapest pension funds. In the 2 tables set out later in the article, you can discover:
- Table 1: Cheapest super funds available for anyone to join (doesn’t include non-public offer funds)
- Table 2: Cheapest pension funds
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 who has $50,000 in their super fund’s default investment option.
Do cheaper fees mean better performance?
During 2015, ratings agency, SuperRatings conducted some handy research on the fees that super funds charge, and after studying 162 super funds over a 10-year performance history, SuperRatings CEO states: “In the majority of cases, the funds with the lowest fees do not necessarily provide a better retirement outcome or return for its members.” For more information on this study, see SuperGuide article Fees: Can cheaper super funds deliver bigger retirement balances?
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. Assuming all other criteria are equal, a super fund that charges higher fees than another super fund, can mean the more expensive super fund delivers you a much smaller retirement balance.
Top 10 cheapest super funds available for anyone to join
The award for the cheapest super fund in Australia that anyone can join goes to ANZ Smart Choice Super according to SuperRatings.
The fee comparisons are based on a fund member who has $50,000 in their super fund’s default investment option.
Table 1: Top 10 lowest super fees as at 31 March 2016
|Rank||Fund name||Fees based on $50,000 account balance||In percentage terms (%)*|
|1||ANZ Smart Choice||$305||0.61%|
|2||Bendigo SmartStart Super||$313||0.63%|
|3||Energy Industries Superannuation Scheme Super||$335||0.67%|
|4||Local Government Super||$338||0.68%|
|5||brightday Complete Super||$345||0.69%|
|7||Club Plus Superannuation||$374||0.75%|
|8||ING DIRECT Living Super||$375||0.75%|
*Percentages are calculated by Trish Power. For example, $374 in fees on a $50,000 account balance is 0.748%, and rounded to 0.75%, likewise $338 in fees on a $50,000 account balance is 0.676%, and rounded to 0.68%
Top 10 cheapest pension funds
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, ratings agency, SelectingSuper has 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).
More than half of the cheapest pension funds are open to the general public, and all pension funds in Table 2 below charge under 0.75% of your account balance in fees, that is less than $750 on an account balance of $100,000. 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.
Note: The fee data for cheapest pension funds is current as at June 2015.
Table 2: Best fee deals across all retirement (pension) funds based on $100,000 account
|Rank||Fund name||Segment||Can anyone join?||Total Expense Ratio (TER)|
|TER %||TER $|
|1||ANZ Staff Super Acc Based Pension||Corporate||No||0.51%||$510|
|2||ANZ Smart Choice Pension||Retail||Yes||0.55%||$550|
|3||MTAA Super Pension||Industry||Yes||0.55%||$550|
|4||Meat Industry Employees’– Pension||Industry Fund||No||0.59%||$590|
|5||AUSCOAL Account-based Pension||Industry fund||Yes||0.64%||$640|
|6||QSuper Income Account||Government||No||0.64%||$640|
|7||Club Plus Pension||Industry||Yes||0.65%||$650|
|8||CBA Group Super Retirement Access||Corporate||No||0.69%||$690|
|9||The Emerald Pension/Wrap||Retail||Yes||0.70%||$700|
Table source: SelectingSuper. According to SelectingSuper, the table represents the top 10 out of 222 retirement products covering all market segments. Table represents fees updated by SelectingSuper in June 2015.
Tip: 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 more than 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.