Top five lowest cost MySuper funds

by |
Fees and investment options for more than 65 MySuper products have been compared, with the top five lowest cost MySuper funds named.

While superannuation research house SuperRatings says it recognises fees should not be the only criteria used in selecting a fund, it named ANZ Smart Choice Super as the lowest cost and First State Super MySuper Life Cycle the second cheapest fund.

But SuperRatings said the most interesting finding to come out of the analysis is the difference in fees between Not for Profit (NFP) and Retail Master Trust (RMT) MySuper products, which continue to narrow.

On a $50,000 account balance, average fees for RMT are now $490, only $25 more expensive per annum than the NFP average of $465.

SuperRatings puts this down to the approach to default investment offerings, with the majority of NFP maintaining their diversified default options whereas most of the RMT sector have opted for life cycle default investment options.  

The key trend is a significant decrease in fees between pre-MySuper products and those MySuper products released to market so far, with a drop in the average fees charged to members of 23%, mainly driven by the increasing competitiveness of the RMT sector, says SuperRatings head of consulting Adam Gee.

"Whilst the fee reduction is a great outcome for members, SuperRatings believes that the focus should remain on the overall net benefit members receive – that is, the impact of investment performance and fees taken together.

"Members face greater risks if their fund’s investments are not meeting their objectives over the longer term, which could quickly erode any perceived savings in fees.”

Investment fees still comprise the biggest component of total fees charged, with total administration and member fees now around equal on a $50,000 balance.

The top five lowest cost MySuper products, measured with a fee on a $50,000 account balance:

1.ANZ Smart Choice Super – $300 fee
2.First State Super MySuper Life Cycle – $332 fee
3.EISS MySuper – $335 fee
4.BOC Super MySuper – $340
5.Club Plus Super MySuper – $363.20
 
  • Sean on 4/12/2013 1:28:03 PM

    Given the average balance in most industry fund accounts is less than $20,000, perhaps its worthwhile doing a cost comparison between "RMT" and "NFP" at that level.

  • Sean on 4/12/2013 9:38:38 PM

    I'm a bit concerned at the extremely low default insurance sums that I've seen. I'm not well versed on them yet so I hope it's just a select issue.

  • Jane B on 5/12/2013 10:49:22 AM

    The current focus on lowest fees and interaction with new age based default life-cycling is only a short term occurrence. As Lifecycle Mark 2, defaults using more factors than just age, are implemented the focus will shift to Net Benefits to members. Trustees tailoring super to members can improve the retirement balances, lower risk as retirement approaches and hence Net Benefits to members. It does involve breaking members into different retirement balance ranges based retirement lifestyle expectations and naturally the net benefit and fees will vary across the different default groups. The focus will change from cheap and nasty Age Based Life-cycling to more sophisticated life cycling using factors beyond just age and with a range of fees aligned to net benefits.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions