Why Paying High Fees for Your Super Fund Doesn’t Make Sense
It’s important to choose a superannuation fund wisely. Opting for a low-cost super fund can lead to significant savings over time, ultimately boosting your retirement savings.
You can easily find information about your fund’s fees and performance on its website or by reaching out to them directly.
Understanding Super Fees:
When checking your fund’s fees online, be prepared for some detailed explanations. Many funds, like UniSuper and AustralianSuper, provide comprehensive fee breakdowns.
These fees can include administration fees, investment fees (which might include performance fees), transaction fees, trustee fees, and brokerage fees. Additionally, there may be charges for insurance cover and optional financial advice.
Why Fees Matter:
Even seemingly small fees can accumulate over time and impact your retirement savings. For example, paying 2% in fees instead of 1% could result in having 20% less in your superannuation nest egg over 30 years.
Different investment options within your super fund may have varying investment management fees. Larger funds often charge lower admin fees due to economies of scale.
What APRA Says:
APRA, the regulator of employer superannuation funds, stresses the importance of monitoring fees. They’ve found that high administration fees can significantly reduce members’ retirement outcomes over time.
Features vs. Returns:
Having more features in your super fund doesn’t necessarily mean better returns. APRA notes that larger funds tend to offer lower admin fees due to their scale. Also, funds using platforms may incur higher fees without delivering better performance.
Considerations:
Before switching funds based on fees or performance, ensure you understand the implications. Check if your current fund provides adequate insurance coverage and consider any potential loss of benefits before making a move.
Ultimately, it’s essential to be proactive in managing your super fund. Use available tools to compare funds and consider switching if you find better options that align with your financial goals.
Step-by-Step Guide
Checking your super fund’s fees and performance is essential for managing your retirement savings effectively. Here’s a step-by-step guide on how to do it:
- Gather your super fund information: Collect all the relevant documents related to your super fund, including your member statement, annual report, or any other communications from your super fund.
- Access your super fund’s online portal: Many super funds have online portals or websites where you can log in to access detailed information about your account. If you haven’t already, register for an online account with your super fund. You may need your member number and other identifying information to set up an account.
- Review your super fund’s fees: Once logged in, navigate to the section that provides information about fees. Look for details on the fees you’re being charged, including administration fees, investment fees, and any other charges associated with your super account. Pay attention to the total fees you’re paying and compare them to industry benchmarks to ensure they’re competitive.
- Check your super fund’s performance: Look for a section on the website that provides information about your super fund’s investment performance. This typically includes details about the returns your super fund has generated over different time periods, such as one year, three years, five years, and since inception. Compare your fund’s performance to relevant benchmarks, such as the median return for similar funds or the performance of relevant market indices.
- Understand the investment options: Most super funds offer a range of investment options, such as growth, balanced, conservative, and ethical investment options. Review the performance of each investment option available to you and consider whether your current investment mix aligns with your risk tolerance and investment goals.
- Review additional features: Explore any additional features or benefits offered by your super fund, such as insurance options, financial advice services, and online tools and resources. Evaluate whether these features are valuable to you and whether they justify any additional costs or fees.
- Consider seeking professional advice: If you’re unsure about how to interpret your super fund’s fees and performance or if you have questions about your investment strategy, consider seeking advice from a qualified financial adviser. They can help you understand your options and make informed decisions about managing your super fund effectively.
Regularly reviewing your super fund’s fees and performance is an important part of managing your retirement savings and ensuring you’re on track to meet your financial goals. By following these steps, you can stay informed about your super fund and make any necessary adjustments to optimize your retirement savings strategy.