Median superannuation fees decreasing

Superannuation funds have been able to decrease fees over the last few years despite additional compliance pressures, according to SuperRatings.

Speaking at the Lonsec Symposium in Sydney, Camille Schmidt, market insight manager at SuperRatings, said the median fee for balanced options (60% to 75% growth assets) with account balances of $50,000 was $564, or about 1.1%.

Schmidt said fees had fallen in both the Not for Profit and Retail Fund sectors of the market, with Retail Master Trusts reducing administration fees, and the Not-for-Profit funds experiencing lower investment related fees and costs.

“Member fees are now aligned across the different sectors in the industry,” Schmidt said.

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“Retail funds we are seeing reductions occur. So last year this member fee was around $92. And the thing with this one is that, while they are decreasing, they are still sitting a bit higher than the market there, so decreases are being driven by more competitive structures coming through and also by the closure of legacy products, which is pleasing to see.”

Fee medians

Source: SuperRatings

SuperRatings investment fees calculations were based on Investment Management (IMF) plus the Indirect Cost Ratio (ICR) or the IMF plus the transaction costs, a mixed calculation due to RG97 being in a transition period with some funds still using legacy IMF+ICR calculations.

“But key trends with investment costs and fees for not for profits, we have seen fees decrease and come down from around 72bps last year to 65bps.

“So that's being driven by greater allocations to passive investments. And then we're also seeing some funds which have adopted a model of internalisation starting to realise the benefits coming through and for those using an external structure, there's been significant renegotiations there with fund managers.

“Retail funds, we've actually seen a six-basis point increase in that 81-basis point fee and that is based on some performance fees coming through given the strong performance for the equities over the last year.”