By: Anthony Keane
Don’t hand over money to your super fund that you don’t need to.
EXORBITANT super fund fees could cost you hundreds of thousands of dollars in retirement so it’s wise to make sure you’re not paying more than you should.
Superannuation specialists say fees are more transparent than ever with easy checks available online and on annual fund statements — which should arrive by the end of September.
Comparing fees starts with taking an interest in your super. It’s your money, just like cash in the bank or a share portfolio, but with extra rules that stop you from withdrawing it all before you retire.
Compare super fund fees
Research group Canstar examined almost 70 industry and retail super funds and found the cost of paying the highest fees, rather than average fees, on an $80,000 super fund balance could shrink a nest egg by more than $200,000 over 30 years.
It found for an $80,000 balance, total annual fees could range from $450 to $2322. For a $140,000 balance the fee spread is between $728 and $3966, and for a $200,000 balance it’s between $998 and $5610.
Canstar spokeswoman Justine Davies says there are some great value funds, both retail and industry super. “But there is a big difference in fees being charged and all other things being equal, this can have a big impact on your retirement nest egg,” she says.
Davies says fee disclosure has improved in recent years but is still confusing for many workers, who need to learn about administration fees, investment fees and potentially adviser fees. “Just try mentioning those words at a barbecue, and watch people’s eyes glaze over.”
People who haven’t examined their super fund fees for years — or decades — may be getting ripped off, because some old funds charge ridiculously high management fees and exorbitant entry and exit fees.
Wealth on Track principal Steve Greatrex says most modern super products are “generally competitive” and the fees you pay usually depend on the features you are getting.
There are several super comparison websites available, and moneysmart.gov.au has a good guide to using and understanding them. However, don’t just chase the cheapest fee.
Basic funds may have low fees but offer little flexibility, while a fund with more features — such as active investment management, capital protection or the ability to buy and sell individual shares — can cost more.
“My personal super is in a fund that is relatively expensive, but it is managed to avoid volatility because I am getting closer to my retirement and I don’t want to suffer a huge fall if we have another GFC,” Greatrex says. Many of his older clients share a similar view.
Greatrex says comparing super funds’ long-term investment returns is as important as comparing fees.
Source: news.com.au
