Compare the cheapest super funds

What is the cheapest super fund

All superannuation funds charge fees. These are deducted from your super fund, typically at the end of each month. Fees are either a dollar amount or a percentage, or both.

The cost of the fees you’ll incur will vary depending on your account balance, investment strategy, management options, pension income and market conditions.

Additional factors to consider include whether you arrange your super fund independently (self-managed super funds) or if you arrange it with your employer, and how much insurance cover you have for your super fund.

On average, fees for super fund members across all demographics range from 1-1.7% of their total balance.

What might be considered the “cheapest” super fund for one person may not necessarily be the cheapest for others.

What superannuation fees and costs could you be charged?

In order to get a cheap superannuation fund, you have to be aware of the general fees and costs that are usually charged to a super fund. This can help you determine which fees you would like to avoid or minimise.

The fees charged by superannuation funds include:

Administration fees

This a general fee that is charged by most super funds. It covers the cost of operating and maintaining the fund. 

Indirect costs

Indirect costs are the costs that your super fund pays to other providers, such as investment managers. How much these fees cost depend on the value of your investment. 

Switching fees

These fees may be charged when you make changes with, say, your investment option within your super fund. 

Investment fees

Investment fees vary depending on which super fund you have. This fee may be charged because of the cost it takes to manage your investments in the super fund. 

Advice fees

If you seek advice about your super, your investment options or other super products, a fee is usually charged for this. Sometimes, the adviser receives fees for whatever products they recommend to you. 

Exit fees

An exit fee may be charged if you decide to switch superannuation funds.

Activity-based fees

These fees may be charged when a particular service is provided by your super fund. However, it only applies to a few scenarios. For example, the need to split a super balance in the event of a divorce or another legal-related matter.

Insurance premiums

This is the insurance cost that your super fund usually provides. Please note that you have the option of changing the insurance cover for your super. 

Buy/sell spread

This fee may be charged when you make transactions through your super, including contributions and withdrawals.

How do you find the cheapest super fund

RateCity offers a helpful online comparison search tool that allows you to quickly compare several hundred different superannuation options. Simply enter your age and current super balance and it’ll filter recommended options, including fund details and fees, for you.

Are cheaper fees better for a super fund?

You may be enticed to consider super funds with next-to-no fees but keep in mind that a fund with higher fees might return greater value over time than those with lower servicing charges. Remember, the fees you’re charged will depend on individual circumstances.

Consider making a habit out of checking your super fund to ensure payments are being made correctly and assess whether your investment options remain reflective of your preferences and where you’re at in your life.

How to switch to a cheap superannuation fund

Let’s say you already have a superannuation fund but found a cheaper, more suitable option and wish to change.

To switch superannuation funds you’ll need to fill out a rollover withdrawal form and send it to your new super provider. These forms can typically be found on the website of the super fund you plan on leaving, or the super fund you would like to transfer your balance to.

It may be sensible to contact the super fund that you plan on transferring your balance to, allowing them to handle the transfer on your behalf. This may be a faster and more efficient approach as it’s in their benefit to bring your money over to their fund.

Be aware that exit fees usually apply when you switch super funds.

The cheapest option isn't necessarily the best and it's important to ensure that the fund you choose suits your retirement goals and meets your financial expectations. Compare your options to make the best decision.