How to save on your superannuation fees
There are many different fees associated with your super fund and all of these eat into your fund returns. So it makes sense to reduce these wherever possible.
The main types of fees you could be liable for are:
- Member fees are general administration fees to cover the cost of keeping your super account.
- Management or investment management fees (also known as MER) are fees for managing your investment, which can vary for different investment options.
- Contribution fees cover the administration expense of receiving and investing your contributions.
- Adviser service fees are for personal advice provided about your super and other investments. Your adviser may also receive commissions for certain investments that they recommend to you.
- Insurance premiums – The cost of insurance provided through your super fund. Many super funds have a set default insurance option. You can usually choose to lower or increase your level of cover based on your needs.
- Establishment fees – An admin charge for setting up your account in the fund.
- Withdrawal or termination fees – You may be charged fees when you take money out of your super account, for example when you retire or rollover to a different fund.
- Investment switching fees – Fees for changing investment options within your super account.
- Issuer fees – Fees charged by the investment issuer for overseeing the fund.
- Expense recovery fees – Out-of-pocket expenses your trustee is entitled to recover from your super account.
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Many Australians accumulate multiple super funds over the years, including some they might have forgotten about. With each of these attracting some or all of the above fees, the most obvious starting point for reducing fees is firstly through reviewing your super fund(s) against other offerings and secondly through consolidating your super into one fund.
A surge in people consolidating their superannuation accounts is saving Australians million of dollars a year in fees. Hundreds of thousands of savvy Australians are paying attention to their retirement savings and rolling multiple accounts into one.
As a result, new figures released by the Australian Taxation Office figures shows a spike in Australians merging superannuation accounts. This is a climb of 45 per cent from the 2013/14 financial year when another 154,000 accounts worth more than $765 million that were consolidated.
A simple way to access information on your super is the Federal Government’s online portal myGov, which has made it much easier for people to consolidate accounts and lets you roll over your super for free.
Having fewer accounts is better in most cases as if you consolidate, you’ll pay less fees. And reduced fees mean members can enjoy healthier returns on larger balances.
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