Super fees

Are you paying too much in super fees?

A look at how super fees could be eating away at your retirement savings, plus the best and worst performing super funds according to Stockspot.

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Women don’t need another hit to their superannuation, but chances are if they are in one of the highest fee charging super savings funds, that’s probably what’s happening.

A report by investment services firm Stockspot, which lists the highest charging both super fund and managed fund customers the most, found that over $777 million was charged by the most expensive fund in 2016 – most are offered by the major banks.

Even more alarming was that the report claims that if a person remains in an expensive super fund that they risk paying out $250,000 in management and investment fees over their life time.

Over a hundred super funds that have been put in the spotlight for having above average fees of 2.2 per cent. This is much higher than the average lower fee fund which charges around 1.4 per cent.

The worst funds in the report featured retail and industry super funds, however retail funds tended to dominate.

These “fat” funds scored poorly on performance and fees:

• Perpetual WF Super Colonial First State Equity Income
• Macquarie Diversified Private Equity 2003 units Super
• OA Per Super Onepath Protected AUS 50 NEF
• BT Business Super ING Blue Chip Australian Shares
• OA Per Super Onepath Protected AUS 50 EF

Among the 80 super funds that were rated as “fit” in terms of performance and fees were:

• MLC MK Business Superannuation Perpetuals Wholesale Ethical SRI
• MLC MK Super Perpetuals Wholesale Ethical SRI
• Suncorp Optimum Pers Super Perpetual Wholesale Ethical SRI
• Suncorp Optimum Corp Super Perpetual Wholesale Ethical SRI
• MLC MK Business Superannuation Investors Mutual Australian Share

Stockspot says that if stuck in a fat fund a woman in her 30s could lose over $230,000 by retirement age leaving her with only $747,000 superannuation.

The report points out that by switching to a super fund with a lower fee, that a 30 year old could boost their super by over $300,000 over their lifetime.

The average woman retires on around half the super of men, and as it stands that average woman has about $54,000 in superannuation while men have about $91,000, according to the Australian Super.

The main reason that women tend to have less in their super savings than men is because of a gender pay gap in certain sectors, time spent out of the paid workforce caring for loved ones and the fact that one in five women work part-time.

Women are no worse off than men when it comes to being affected by these co-called fat funds because the fees charged are generally a percentage of the balance.

Yet when you have situations where women already have a lower savings pot than men, the impact can be a nasty one.

For a single person to retire modestly they need $23,767 per year. To retire comfortably they need $43,062 per year.

Stockspot says that after fat fund fees women are left with $23,118 per year which does not even meet a modest retirement. For men, after fat fund fees are taken out they’re left with $28,379 per year to spend in retirement.

These both assume that super funds can achieve returns of 4 per cent per annum in draw-down stage.

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