- Do cheaper fees mean better performance?
- Top 10 cheapest super funds available for anyone to join
- Top 10 cheapest pension funds available for anyone to join
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. Latest update was August 2017, using March 2017 (super funds), and December 2016 data (pension funds).
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, and periodically on the cheapest pension (retirement) 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 available for anyone to join (doesn’t include non-public offer 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 comparison for super funds (accumulation phase) are based on a fund member who has $50,000 in their super fund’s default investment option, as at 30 March 2017. The fee comparison for pension (retirement) funds are based on a fund member who has $250,000 in their pension fund’s default investment option, as at 31 December 2016.
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 Vision Super Personal, 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 fund fees as at 31 March 2017
|Rank||Fund name||Fees based on $50,000 account balance||In percentage terms (%)*|
|1||Vision Super Personal||$228||0.46%|
|2||Bendigo SmartStart Super||$313||0.63%|
|3||Energy Industries Superannuation Scheme Super||$315||0.63%|
|4||ANZ Smart Choice Super||$320||0.64%|
|6||ING DIRECT Living Super||$375||0.75%|
|8||Virgin Money Super||$380||0.76%|
|9||brightday Complete Super||$395||0.79%|
|10||Grow Wrap Super||$397||0.79%|
*Percentages are calculated by Trish Power. For example, $228 in fees on a $50,000 account balance is 0.456%, and rounded to 0.46%, likewise $313 in fees on a $50,000 account balance is 0.626%, and rounded to 0.63%
Source: SuperRatings, although percentages are calculated by SuperGuide.
Top 10 cheapest pension funds available for anyone to join
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, SuperRatings has produced a table listing ten of the cheapest pension options.
According to SuperRatings, the table below describes the fees payable on a pension account for a fund member with a $250,000 balance, as at 31 December 2016. The money is invested in the pension products default investment option (typically a balanced or growth option).
The award for the cheapest pension fund in Australia that anyone can join goes to ANZ Smart Choice Pension, according to SuperRatings.
The fee comparisons are based on a fund member who has $250,000 in their super fund’s default investment option.
All pension funds in Table 2 below charge under 0.70% of your account balance in fees, that is less than $700 on an account balance of $250,000. 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.
Table 2: Top 10 cheapest pension funds based on $250,000 account, as at 31 December 2016
|Rank||Fund name||Fund type||Can anyone join?||Fees based on $250,000 account balance||In percentage terms (%)*|
|1||ANZ Smart Choice Pension||Master trust||Yes||$1,400||0.56%|
|2||AMIST Pension||Industry fund||Yes||$1,538||0.62%|
|3||Mine Wealth + Wellbeing Pension||Industry fund||Yes||$1,605||0.64%|
|4||ING Direct Pension Account||Master trust||Yes||$1,625||0.65%|
|5||Club Plus Pension||Industry fund||Yes||$1,644||0.66%|
|6||Sunsuper for Life – Income Account Income Account||Industry fund||Yes||$1,658||0.66%|
|7||Bendigo Smart Pension||Master trust||Yes||$1,673||0.67%|
|8||HESTA Income Stream||Industry fund||Yes||$1,691||0.68%|
|9||Local Government Super Account Based Pension||Industry fund||Yes||$1,720||0.69%|
|10||AMP Flexible Super Retirement (Core Package)||Master trust||Yes||$1,737||0.69%|
*Percentages are calculated by Trish Power. For example, $1,644 in fees on a $250,000 account balance is 0.6576%, and rounded to 0.66%, likewise $1,658 in fees on a $250,000 account balance is 0.6632%, and rounded to 0.66%
Note: Fee totals in table 2 include percentage-based administration fees, member fees, investment management fees (including performance-based fees) and taxes, but excludes any applicable employer size rebates.
Table source: SuperRatings, although percentages are calculated by SuperGuide.