Superannuation fees have fallen to 0.93% per annum, the lowest total expense ratio on record.
Super fees have fallen by 2% over the past year, with Australians paying $32 billion in fees, according to research from Rainmaker Information's Superannuation Benchmarking Report.
The review analysed 1,500 super fund fee options offered across 354 products.
Self-managed superannuation funds remain the cheapest segment, with average fees of 0.65% pa.
MySuper is the most competitive segment, covers the most members, and has average fees of 1.00% pa as at 30 June 2023.
“MySuper fund fees fell from 1.05% pa to 1.00% pa over the year to June 2023, a significant reduction,” said Pooja Antil, research manager at Rainmaker Information.
“This is the biggest fall in the MySuper benchmark fee since 2014.”
“Of the MySuper products, fees are now level for retail and not for profit funds.”
Assessing MySuper fees further, not for profit funds offer lower administration fees, while retail products have lower investment fees on average.
Personal and retirement products still lag behind on fees, charging 1.16% pa and 1.07% pa respectively.
While the total expense ratio for fees decreased, the overall fees paid to superannuation funds increased 3%, reaching $32 billion.
Superannuation funds are managing approximately $3.5 trillion dollars for Australian super fund members.
Funds under management has grown from $3.3 trillion to $3.5 trillion over the past year.
An interesting trend that has emerged is the fact that total fees paid are growing twice as fast as funds under management.
While fee revenue increased by 3.0%, superannuation FUM only increased by 1.5%.
“This discrepancy highlights a potential diseconomies of scale effect, which may attract regulatory attention in the near future,” said Antil.
“While fee revenue increased 3% over the past year, this is lower than inflation and the overall pool of funds under management in superannuation has also increased in that time.”
“Any reduction to the average fees is a good result for consumers, and we should encourage a healthy and competitive superannuation market that continues to put downward pressure on fees.”
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About Rainmaker Information
Rainmaker Information, founded in 1992, is a leading Australian-based financial services information publishing house providing marketing intelligence, research, and consulting services on the wealth management industry.
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Rainmaker Information is owned by Institutional Shareholder Services (ISS) and is part of its ISS Market Intelligence business.
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Julian Clarkstone
P. 02 8234 7514
E. julian.clarkstone@rainmaker.com.au
