Understanding super fees
Every super fund will charge you fees for the services they provide. Some may charge less than others, and super funds that have lower fees will build your savings faster. But is that really all there is?
Main types of fees
Fees are usually deducted from your account at the end of the month, or when an action is taken. They can either be a dollar amount or a percentage of the money in your account. Usually you’ll be paying for:
- Member fees – the normal administration fees that cover the costs of keeping your super account.
- Management or investment management fees – these can vary depending on the different investment options used for managing your money.
- Contribution fees – covers the administration expenses of getting and investing your contributions.
- Adviser service fees – any personal advice provided about your super and investments are charged here. Your adviser may also get a commission if they’ve recommended certain investments to you.
- Insurance premiums – you can usually choose to lower or increase the level of cover based on your needs.
The best way to tell if you are paying too much is to compare your fees with other superannuation products that provide similar services. The Australian Securities and Investments Commission (ASIC) provides a Superannuation Calculator that will help you compare.
Choose a fund with lower fees. Even the difference of 1 per cent in fees will add up decades from now and eat into your investment money.
Related links:
The “secret” bonus for seniors who work
How to choose the best super fund for you
Are you planning on relying on the age pension to provide an income?