Younger people usually don’t get too fussed about their super funds – but there are plenty of reasons why they should.
People under 30 would probably pay better attention, for instance, if they knew their superannuation fund could be charging as little as $300 or as much as $1245 in annual fees on a $50,000 account – all for “services” they didn’t ask for and may not need. If your super account reaches $200,000, the gap widens considerably – $1200 versus $4980 in annual fees in one of the more extreme cases.
These kinds of deductions can really chip away at your retirement savings. It’s also important to know whether you’re in a retail or an industry super fund – fees for retails funds are usually higher.
To make matters worse, superannuation fees are often hard to detect – and the financial services industry is fighting hard to keep it that way (in part by getting rid of the “opt in” clause in the Future of Financial Advice (FoFA) reforms, which demand better fee disclosure).
In this report, we show you how to find the best-performing super fund and outline which funds charge the lowest fees.
My Super savings
It’s not surprising that most younger people don’t know where their superannuation money is going. About 70% of Australian employees leave it up to their employer to choose their super account.
The launch of the government’s My Super scheme at the start of this year means employers now have to make sure default superannuation accounts (where your money ends up if you don’t make a choice) are in a fund that offers a My Super option. As of February, the introduction of the scheme had caused fees to drop by 26% across the industry.
But there's a catch. Even though your super account has to be with a fund that offers a My Super
option, your money doesn’t have to go into an actual My Super account until 2017. That means nearly four more years of avoidably high fees for those who aren’t paying attention.
The solution? If your money started off in a default account, tell your super fund to move your money to a My Super account if they haven’t done so already.
Average superannuation fees (based on percentage of account balance):