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.

Table 2 – Estimated retirement outcome on a $50,000 starting balance, plus super guarantee (SG) contributions, for 35 years

Total fees % per year	Estimated retirement balance	Difference to median
0.50%	$621,837	$48,508
0.60%	$609,576	$36,247
0.70%	$597,597	$24,268
0.80%	$585,893	$12,564
0.91%	$573,329	$0
0.97%	$566,609	-$6,720
1.00%	$563,285	-$10,044
1.10%	$552,367	-$20,962
1.20%	$541,700	-$31,629
1.30%	$531,276	-$42,053
1.40%	$521,089	-$52,240
1.50%	$511,135	-$62,194

The results in the table above demonstrate the impact of investment fees on net investment returns; that is, the assumed 7.5% annualised gross return after various levels of total fees (investment and administration fees) above.

These net returns are what you receive in your account. When compounded over 35 years, the differences are clearly significant to final retirement balances. But it’s never too late to review the fees you are paying and the impact they could have on your retirement balance.

Table 3 – Estimated retirement outcome on a $250,000 starting balance, plus super guarantee (SG) contributions, for 20 years

Total fees % per year	Estimated retirement balance	Difference to median
0.50%	$695,776	$39,380
0.60%	$685,945	$29,549
0.70%	$676,262	$19,866
0.80%	$666,723	$10,327
0.91%	$656,396	$0
0.97%	$650,834	-$5,562
1.00%	$648,072	-$8,324
1.10%	$638,956	-$17,440
1.20%	$629,977	-$26,419
1.30%	$621,132	-$35,264
1.40%	$612,419	-$43,977
1.50%	$603,838	-$52,558

Using the Moneysmart Superannuation calculator

To see how your current salary, super balance, contribution arrangements and desired retirement age may be impacted by fees and charges, check out the Moneysmart superannuation calculator here.

The calculator allows you to input your key figures, and then either accept the default assumptions for fees, charges, returns and tax on earnings, or alter them to match your current (or expected) experience of your super fund.

To find out what fees you are being charged:

• Go to your fund’s website
• Find the Product Disclosure Statement (PDS) for your investment option
• Look for the table called ‘fees and costs summary’.

The calculator allows you to input both flat dollar fees and percentage-based fees. The calculator also allows you to compare the result of your fund with an alternative fund.

Some tips on returns and investment fees

When comparing funds and fees, it’s important to compare like with like. The level of fees will depend on the investment options you choose and your account balance, as well as your choice of fund. If you’re comparing two super funds, make sure the investment option you select in each one has a similar percentage allocated to growth and defensive assets.

Don’t, for example, compare the investment fee on a Balanced index option with 75% growth assets of one fund against the investment fee on a High Growth option with 99% growth assets of another. The latter will have a higher allocation to actively-managed shares, which may be more expensive to manage. Consequently, it’s likely that the headline investment fee will be higher too.

Investment returns on superannuation options are always reported net of investment fees (and relevant taxes). If you view your annual statement and it reports a return of 8.2% for the year (as an example), that figure is the net return, after the deduction of investment fees incurred during the year.

In the David and Nina examples earlier, we used a gross return of 7.5% annualised for all the projections and then applied 12 investment fee scales to arrive at the differing projected balances at retirement. So be careful when using a superannuation projection tool not to double count investment fees by using an option’s net returns and then further deducting investment fees from these.

You may overcome this issue by adding back the relevant investment fee to your option’s long-term investment performance, to arrive at an approximate gross return equivalent when using the Moneysmart superannuation calculator.

Important notes and assumptions

ASIC’s Moneysmart superannuation calculator is a handy tool for projecting super balances and identifying the impact of varying contribution levels, investment options and associated fees and charges. It is, however, based on a set of assumptions that you should be aware of. You can view the key ones by clicking the arrow below:

View assumptions

• Inflation (as measured by the CPI) rises by 2.5% each year
• A further 1.2% rise occurs each year due to the cost of rising community living standards
• The results are thus shown in ‘today’s dollars’, effectively discounted at 3.7% each year
• The default investment return is 7.5% each year before investment fees and tax on earnings (that is, the ‘gross return’)
• An effective tax rate of 7.0% is applied
• It is assumed that the fund has your TFN and applies tax accordingly

A full list of the assumptions (and their explanations) underlying the projections can be found at the bottom of the calculator and it is recommended you review these when using the tool.