The super funds that have slashed their fees
About 60% of all MySuper products reduced their fees last financial year, with the average fees paid by members now sitting at 1%, according to new analysis from Rainmaker Information, publisher of Money magazine.
The 13.5 million Australians with a MySuper account currently pay less than $30 billion a year in fees after a year of reductions across not-for-profit and retail super funds.
In the last decade, super fees have fallen by a quarter, with about half of the action taking place in the last three years alone.
Six in 10 default MySuper products reduced fees in 2020/21, with fees now averaging 1% overall. The average default MySuper product now charges 1.08%, down from 1.13% the previous year.
The total expense ratio for not-for-profit and retail funds is now 1.07% and 1.08%, respectively. There is also no difference in the total fee ratio for single strategy and lifecycle products.
According to the analysis, UniSuper has the cheapest total expense ratio for a public offer product at 0.65%. This is followed by Bendigo SSSE and AMG Corporate, both on 0.70%, and Virgin Super Employer (0.73%) and QSuper Accumulation (0.74%).
The top 10 is rounded out by Suncorp ESB (0.77%), AustralianSuper (0.77%), AMIST Super (0.81%), Rest (0.89%) and EISS Super (0.89%).
The fee cuts follow years of regulatory scrutiny and increased competition, with Rainmaker Information executive director of research Alex Dunnin saying driving fees down is the retail sector's way of competing with the not-for-profit sector.
Retail fund admin fees were 3.5 times that of not-for-profit funds in 2010. This ratio has now halved but remains at 2.0 times, he says
"The cheapest retail funds are now as low-cost as the cheapest not-for-profit funds. Four of the 10 cheapest MySuper products are retail," Dunnin says.
The average Australian now pays about $2200 in super fees per annum, which is a slight increase in dollar terms. However, the average account balance has also increased, particularly after the record-breaking returns most super funds saw last year.
With investment costs being a major contributor to overall fees, Rainmaker predicts continued pressure to keep fees low will see super funds rethinking their investment strategies, even indexing large portions of funds under management.
At present, indexed super options charge an average of just 0.12%.
"This pressure on super fund fees, if it stays on its current track, could mean that in five years' time, average super fund fees could be as low as 0.85%. Australia's sharpest priced funds by then could be charging total fees below 0.5%," Dunnin says.
"If this was to happen, Australia could be on track to have one of the best value superannuation fund systems in the world."
Rainmaker's annual fee study looked at 2683 fee options across 175 products.
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