How super fund fees impact your net returns

Hands up if you know what fees your super fund charges? No idea? You’re not alone.

Most super fund members are aware that being in a fund with superior investment performance will mean a bigger retirement balance.

What’s not so well known is the impact of fees. The figure that really matters when it comes to your retirement balance is the net return after fees and costs.

Know what fees and charges you are paying

Your super fund might have above-average investment returns, but if it charges above-average fees, you could retire with less money than someone in a fund with similar returns but lower fees.

Even small differences of 0.2% or 0.5% may feel trivial now, but the impact on your retirement could be far from trivial, due to the effect of compounding over long (multi-decade) timeframes.

The mathematics of compounding works in the same way for fees as it does for returns, except fees subtract from your final wealth, rather than add to it. So it pays to know exactly what fees you are incurring within your super or pension fund and decide whether they represent value for the member services, support, insurances (where applicable) and returns you are getting from your fund.

The first step in understanding how fees may impact your retirement super balance is to know what fees and charges you are paying. This can be a complex task, as the range of fees can vary, depending on the type of fund you are in, whether you hold insurances or pay for financial advice from your super.

In total, there can be up to ten different fees and charges applied to your account. Some are periodic (such as administration fees) and some are one-off (such as family-law-related requests). The way fees are charged is also important, with some based on a percentage of your account balance (such as investment fees), while others are a flat fee (often administration fees) and some may be a hybrid of the two.

Median default super fund fees are falling

In practice, the fees that are most critical to your retirement outcome are typically investment and administration fees. And they vary widely between and within funds.

For example, Hostplus charges total fees on a $50,000 balance of $625.26 per year for their Balanced (MySuper) option but just $135.26 for their Indexed Balanced option. To put that in perspective, the annual net returns (after fees and costs) over ten years to March 2025, for these options are 7.84% and 6.89% respectively. So in this case, paying more for active management did pay off in the long run.

Some funds – including AustralianSuper, Australian Retirement Trust (ART), Aware Super, Brighter Super, Care Super, REST, Mercer, MLCC and Vision Super – now cap their administration fees.

As you can see in the table below, investment fees are the biggest contributor to the median total fee for both industry and retail funds. It is also clear that fees have been falling over the past decade, especially for retail funds, although their median total fee of 0.97% is still higher than the industry fund equivalent of 0.91%.

Table 1: Change in median default super fees since the start of MySuper (% per year)

	Pre-MySuper (December 2014) % p.a.	December 2024 % p.a.
Industry funds
Administration fee (on $50,000)	0.27	0.29
Investment fee	0.68	0.62
Total fee	0.95	0.91
Retail funds
Administration fee (on $50,000)	0.74	0.35
Investment fee	0.74	0.62
Total fee	1.48	0.97

Source: Chant West

To illustrate the impact of different fee levels on retirement outcomes, let’s look at some examples.