A fee of 1% sounds harmless. On a $40,000 balance it’s $400 a year, less than a phone plan. The problem is that it’s charged on your whole balance, every year, as the balance grows into the hundreds of thousands, and every dollar taken in fees also stops compounding. Over a working life, that adds up to a startling amount.
The same person in five different funds
A 30-year-old earning $80,000 with $40,000 in super, retiring at 67, with the same 6.5% investment return before fees:
| Total fees | Balance at 67 (today’s dollars) | Cost compared with 0.5% |
|---|---|---|
| 0.5% a year | $744,000 | — |
| 0.8% a year | $695,000 | $49,000 |
| 1.0% a year | $664,000 | $80,000 |
| 1.5% a year | $594,000 | $151,000 |
| 2.0% a year | $532,000 | $212,000 |
Nothing else changed: same salary, same contributions, same investments. The only difference is the fee, and it’s the difference between a comfortable retirement and a modest one.
It still matters later in life. At 45 with $150,000, moving from 1.5% fees to 0.8% is worth about $59,000 by 67, in today’s dollars.
The fees to look for
| Fee | What it is | Typical form |
|---|---|---|
| Administration fee | Running the account | A flat dollar amount per year plus a percentage |
| Investment fee | Managing the investments | A percentage of your balance |
| Performance fee | Extra charged when returns beat a benchmark | Varies |
| Transaction costs | Buying and selling assets | A percentage, often shown separately |
| Insurance premiums | Life, TPD and income protection cover | A dollar amount, deducted from your balance |
| Switching or advice fees | Changing options, or advice paid from super | Per event |
Insurance premiums aren’t technically fees, but they come out of your balance the same way. Check you aren’t paying for cover in two funds, or for cover you don’t need.
Flat fees hit small balances hardest
A $78 flat admin fee is under 0.1% of $100,000, but almost 4% of a $2,000 balance. That’s why forgotten small accounts can be eaten away, and why consolidating into one fund often makes sense. Before you roll over, check you won’t lose insurance you need or a defined benefit you can’t get back.
How to compare funds
- Find the total annual cost for your balance: funds must show an example on a $50,000 balance in their product disclosure statement and fee summaries.
- Compare net returns after fees over 7–10 years for the same type of investment option.
- Check the ATO’s YourSuper comparison tool, which ranks MySuper products by fees and long-term net returns and flags funds that failed the annual performance test.
- Look at insurance, service and features only after fees and performance.
Try your own fee level in the super calculator: change the fee field and watch the retirement balance.
Frequently asked questions
What is a good fee for super?
Many large MySuper products charge around 0.5%–1.0% a year in total on a $50,000 balance. Much above that, check what you’re getting for it.
Are higher fees worth it for better returns?
Only if the extra return, after fees, is consistent. Compare net returns over long periods for similar investment options.
Can I claim super fees on tax?
Fees are deducted inside your fund, which claims any deductions. You can’t claim them on your personal tax return.
