Superannuation fund fees have fallen for the first time in six years, down to 1.1% on average, largely due to cuts by retail fund in an effort to be more competitive.
Super fund fees have fallen from an average of 1.2% in 2018 to 1.1% in 2019, the first fall in six years, according to financial information company Rainmaker Information.
Rainmaker says super funds are using higher assets under management and improved economies of scale to cut fees.
“The fall in gross fees was primarily a result of retail funds lowering their fees as a competitive reaction to members moving across to lower priced not-for-profit (NFP) funds.”
The fee gap between the average retail MySuper product and NFP MySuper products has shrunk from 0.24% in 2015 to 0.04% in 2019.
NFP super funds have lower fee ratios across MySuper, personal and retirement products compared to retail funds, on average. Also the NFP products have the lowest fees for ‘retirement’ products, but in retail funds this segment has the highest average fee ratio.
“Super fund fees are approaching an average of 1%. These reductions show an industry shifting towards a greater commitment to improving super for the members,” said Jason Ross, head of superannuation research at Rainmaker Information.
“Australia’s 13.5 million super fund members still pay $2400 on average each year in fees, the equivalent of the average household energy bill.”
The 1.1% average fee comprises 0.7% in investment fees and 0.4% for administration and product related fees.
“After ten years of the regulators failing to make considerable impacts on the super landscape, last year’s Productivity Commission and Royal Commission have already started to prove their effectiveness.”