The difference between the best and worst superannuation funds

AUSTRALIANS could be missing out on tens of thousands of dollars or the equivalent of multiple round-the-world tickets.

AUSTRALIANS could be costing themselves tens of thousands of dollars of savings, the equivalent of multiple round-the-world trips, in retirement by signing up to the wrong super fund.

Many bank-owned super funds were given a hiding in the recent financial services Royal Commission for failing to do the right thing by customers.

This included charging members high fees, giving conflicted financial advice and consistently delivering poor returns.

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New analysis by roboadviser Stockspot, in its latest Fat Cat Funds Report looked at hundreds of super funds, including their fees and performance over the past five years.

It found a 30-year-old male could end up with $544,000 if they retired at 67 and invested their money in some of the best balanced super funds.

This compared with $470,000 at retirement if they had some of the worst funds with higher fees and poor returns.

According to Stockspot’s methodology, a balanced super fund typically invests around 40 to 60 per cent in shares and property.

Stockspot found that for balanced funds, the top 10 had average fees of 1.05 per cent and returns of 7.75 per cent over the past five years. The worst funds had average fees of 1.47 per cent and returns of 4.86 per cent.

Choosing the right superannuation fund with low fees and solid returns can make a big difference in retirement.

COMPARE SUPER FUNDS

Stockspot chief executive officer Chris Brycki said it was vital Australians looked at their super fees to ensure they were not paying too much.

“Go to the website of your fund and make sure you are being charged a low fee,” he said.

“Make sure you are in a fund that has enough growth assets because that’s one way you can also miss out on returns.”

Mr Brycki said often the fees outlined on super statements did not include all the charges that hit members, so they must ring their fund and ask them exactly what they are paying for.

Australian Institute of Superannuation Trustees chief executive officer Eva Scheerlinck warned of the dangers of being in the wrong fund.

“The impact of high fees or poor investment performance on your retirement outcome should not be underestimated,” she said.

“All Australians need to carefully examine their super and consider the long-term benefits of investing in a good value, high performing, not-for-profit MySuper fund.”

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HOW THEY COMPARE

Balanced funds

Average fees Average return

Best 10 funds 1.05 per cent 7.75 per cent

Worst 10 funds 1.47 per cent 4.86 per cent

Growth funds

Average fees Average return

Best 10 funds 1.3 per cent 10.22 per cent

Worst 10 funds 2.21 per cent 5.48 per cent

Source: Stockspot

****EXTRA INFORMATION***

Difference in a growth fund for a 30-year-old male. $754,000 at retirement at age 67, compared to $551,000 for the worst funds. Difference of $203,000.

Originally published as The difference between the best and worst superannuation funds