Note: This article contains the latest available fee information as at 2 November 2012. In this article you can find the cheapest super funds and the cheapest
We are often asked
- 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 commercially available (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 individuals joining a super fund independently (some additional cheap super funds are only available to employees of a company) are set out in the table 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 30 September 2012 | ||
| Ranking | FUND NAME | Fee on $50,000 Balance |
| 1. | First State Super | $227 |
| 2. | RecruitmentSuper – SelectSuper | $271 |
| 3. | Bendigo SmartStart Superannuation Plan | $313 |
| 4. | Club Plus Superannuation | $313 |
| 5. | RecruitmentSuper – EasyChoice | $331 |
| 6. | AMIST Super | $342 |
| 7. | Energy Super | $372 |
| 8. | ING DIRECT Living Super | $375 |
| 9. | Asset Super | $388 |
| 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 nifty 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, kudos 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 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.
| Table 2: Best fee deals across all super funds | ||||
| Rank | Fund name | Segment | Can anyone join? | TER |
| 1 | Australia Post Superannuation Scheme | Government fund | No | 0.12% |
| 2 | Shell Australia Superannuation Fund | Corporate fund | No | 0.39% |
| 3 | State Super (NSW) | Government fund | No | 0.42% |
| 4 | Military Superannuation and Benefits Scheme | Government fund | No | 0.43% |
| 5 | South Australian Ambulance Service Superannuation Scheme | Government fund | No | 0.50% |
| 6 | Rio Tinto Staff Superannuation Fund | Corporate fund | No | 0.52% |
| 7 | RecruitmentSuper | Industry fund | Yes | 0.53% |
| 8 | ANZ Australian Staff Superannuation Scheme | Corporate Fund | No | 0.55% |
| 9 | SA Metropolitan Fire Service Superannuation Scheme | Government Fund | No | 0.57% |
| 10 | Commonwealth Bank Group Super – Accumulation Plus | Corporate fund | No | 0.57% |
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 302 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 November 2012.
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
The cheapest super funds for an individual actively choosing a fund are overwhelmingly
The cheapest fund of all the super funds commercially available for individuals is First State Super Personal Division.
| Table 3: 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 | 0.60% |
| 2 | Club Plus Super Personal Division | Industry fund | Yes | 0.62% |
| 3 | Bendigo SmartStart Super | Master trust | Yes | 0.64% |
| 4 | AMP Flexible Super – Super Account | Master trust | Yes | 0.68% |
| 5 | AMIST Personal Division | Industry fund | Yes | 0.73% |
| 6 | ASSET Super – Personal | Industry fund | Yes | 0.77% |
| 7 | HESTA Super Fund – Personal | Industry fund | Yes | 0.79% |
| 8 | Nationwide Superannuation Fund – Personal | Industry fund | Yes | 0.80% |
| 9 | Media Super Personal | Industry fund | Yes | 0.81% |
| 10 | AustralianSuper Personal Plan | Industry fund | Yes | 0.81% |
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 November 2012.
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
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 | ||||
| Rank | Fund name | Segment | Can anyone join? | TER |
| 1 | Australia Post Superannuation Scheme – Pension | Government fund | No | 0.09% |
| 2 | Energy Super Income Stream | Industry fund | Yes | 0.34% |
| 3 | HOSTPLUS Pension Plan | Industry fund | Yes | 0.43% |
| 4 | Club Plus Pension | Industry fund | Yes | 0.54% |
| 5 | Meat Industry Employees’ Superannuation Fund – Pension | Industry Fund | No | 0.55% |
| 6 | Commonwealth Bank Group Super – Retirement Access | Corporate fund | No | 0.56% |
| 7 | Government Employees Super Fund – Allocated Pension | Government fun | No | 0.61% |
| 8 | QIEC Super Pension | Industry fund | No | 0.64% |
| 9 | AMIST Pension | Industry fund | Yes | 0.65% |
| 10 | AUSCOAL Super Account-based Pension | Industry fund | Yes | 0.65% |
Table source: SelectingSuper (www.selectingsuper.com.au). According to SelectingSuper, the table represents the top 10 out of 219 retirement products covering all market segments. Table represents fees as at November 2012.
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.
I am always perplexed by these league tables, they seem somewhat wrong or incomplete.
Retail funds rarely have a ‘default option’ to compare against. How does SelectingSuper pick which ‘balanced option’ to compare against when a retail fund may have 3 – 6 different ‘balanced options’ within the fund? It seems the more expensive investment is picked in these comparisons for what ever reason.
Why not compare the cheapest investment option available within superannuation funds for a given risk profile? Wouldn’t this give a more objective and possible less biased method of investment/superannuation comparison. I can give a few examples that should be in the list above that are not – CFS Wholesale Multi-Indexed Diversified – total fee 0.62% and the MLC MasterKey Super Fundamentals – MLC Index Conservative Growth Portfolio – total fee 0.78% – there are more…
On another point, creating league tables comparing the ‘default options’ only endorses member disengagement with their superannuation. If superannuation was a personally held investment portfolio there would be no such term as ‘default option’ and there would be no focus on a ‘set and forget’ approach to their funds – forget default options and take an interest in your retirement!
Why is vicsuper never mentioned in the rankings?
Hi Bob
We rely on external sources of information for the Top 10 cheapest super funds. There are plenty of other super funds that are relatively cheap but they don’t make the Top 10. In addition to any administration fee and account-keeping fee, many super funds have investment fees embedded in their investment options. These investment management fees may not be deducted from individual super accounts, but they are deducted from gross investment returns. I understand that these embedded fees are also taken into account when identifying the top 10 cheapest funds.
I have checked out the VicSuper Product Disclosure Statement and based on the fee example provided in the PDS (and using the same size account balance of $50,000 as SelectingSuper does in its top 10 list) it appears that VicSuper has a Total Expense Ratio of approximately 0.92% (just under 1%).
Any super fund with a cost of less than 1% is considered a low-fee super fund.
I suggest you verify my calculations with VicSuper.
Hope this helps.
Regards
Trish
Hi Trish,
I am new at this… I have $30,000 in MLC Masterkey Gold Star Super and $10,000 in GESB (current employer) What I want to know is do I rollover the MLC to GESB or vice versa? Which is the better performing?
Any advice would be great!
Thank You
Shelly
Can you please suggest me a Super fund that charges no fees. I am happy for the Superannuation Company to just keep my money as it is. Do no investments out of it. Dont Manage it. Just keep it with you as a safe custody for me to access it when I retire. My present Super co is doing investments in a range of things which is giving negative returns and also charging Contribution fees etc. As a result my Balance is diminishing. Therefore I am interested in a company that is just happy to keep my money the way it is and do no manage it at all and hence I will pay no Contribution or account management fees. I just want the money I put to be given to me when I retire. Nothing more Nothing Less.
Sudar.. There are a few funds out there that charge no fees at all and allow you to invest in ‘cash-style’ and ‘term deposit’ like investments… Before doing so (if you have not already) be careful investing long term in cash assets that return little over (if at all) the rate of inflation – you may not have enough to retirement and you should contribute more to offset lower long term investment return expectations.
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
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).
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.
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!
thanks i got the info i needed
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?