Superannuation fees fall for sixth straight year

Superannuation fees have continued their multi-year decline, as fund consolidation and index investing deliver scale efficiencies for members.

Superannuation fees have fallen for the sixth consecutive year, according to new research from Rainmaker Information’s Superannuation Benchmarking Report.

Rainmaker estimated that super fund members, including self-managed super fund members, have paid an industry aggregate of $34 billion in fees in 2024–25.

While this represents a 5 per cent rise in total fees paid in dollar terms, it has been outpaced by a 7 per cent increase in funds under management (FUM).

“Seeing fees continue to fall is a great result for members, which have reduced from 1.11 per cent per annum in 2019,” said David Gallagher, executive director of research at Rainmaker Information.

“Super fund consolidation and their respective FUM growth has created increased economies of scale, which, alongside increased investments in indexed products, have been two key drivers for fees declining in percentage terms.”

Fee benchmarks have continued to fall across MySuper and workplace products, but risen for personal and retirement products.

MySuper remains the most fee competitive segment, with average fees falling for the seventh consecutive year, down 0.07 per cent to 0.87 per cent per annum.

Within this category, not-for-profit MySuper products have recorded an 8 per cent drop in total expense ratio (TER) to 0.85 per cent per annum, while retail MySuper products have experienced a small 2 per cent increase to 0.96 per cent per annum.

Personal product fees have risen by 9 per cent, marking the largest increase across all segments, while retirement product fees have grown by 4.7 per cent, driven by retail retirement products.

In contrast, not-for-profit retirement product fees have dropped by 4 per cent.

“The key reason why not-for-profit funds are cheaper than retail funds are due to lower overall administration costs,” Gallagher said.

“Not-for-profit funds have an average 0.11 per cent admin fee advantage (unchanged from last year), while retail funds have an average 0.05 per cent investment fee advantage (down from 0.07 per cent).”