A cheap superannuation fund does not charge as much in fees as the average superannuation fund.
Superannuation fees are deducted from your super fund, typically at the end of each month.
Types of fees and costs charged to a superannuation fund
In order to get a cheap superannuation fund, you have to be aware of the general fees and costs that are usually charged to a super fund. This can help you determine which fees you would like to avoid or minimise.
The fees charged by superannuation funds include:
This a general fee that is charged by most superannuation funds. It covers the cost of operating and maintaining the super fund.
Indirect costs are the costs that your super fund pays to other providers such as investment managers. How much these fees cost you depend on the value of your investment.
Switching fees may be charged when you make certain changes with, say, your investment option in your super fund.
Investment fees vary depending on which super fund you have. This fee may be charged because of the cost it takes to manage your investments in the super fund.
If you seek advice about your super, your investment options or other super products, a fee is usually charged for this. Sometimes, the adviser receives fees for whatever products they recommend to you.
An exit fee may be charged if you decide to switch superannuation funds.
This may be charged when a particular service is provided by your super fund. However, it only applies to a few scenarios, such as the need to split a super balance in the event of, say, a divorce or another legal-related matter.
This is the insurance cost that your super fund usually provides. Please note that you have the option of changing the insurance cover in your super.
This fee may be charged when you make transactions through your super, including contributions, switches, and withdrawals.
What are the cheapest superannuation funds in Australia?
The generic answer would be, of course, that it depends. The market changes all the time, so there’s no definite answer on which providers offer the cheapest superannuation funds in the country. Aside from this, various superannuation funds might charge different fees depending on your account balance, so what would be considered the “cheapest” super fund will be different for many people.
It also depends on various factors, such as whether you arrange your super fund independently or if you arrange it with your employer. It also depends on how much insurance cover you have in your super fund, your investment option, or whether you’re also taking a pension into consideration.
How you can find cheap superannuation funds in Australia
RateCity offers an online comparison search tool that allows you to quickly compare several hundred different superannuation options. All you have to do is put in your age and your current super balance and it’ll filter recommended options for you.
How to switch to a cheap superannuation fund
So, let’s say you already have a superannuation fund in another bank but you’ve found a cheaper option you want to switch to.
To do the switch between supers, you have to fill out a rollover form and then send it to your new super provider. You’ll need to provide proof of identity in order to do this.
However, be reminded that exit fees usually apply when you do decide to make this switch.
Pros and cons of a cheap superannuation fund
The main benefit of a cheap superannuation fund is that less fees and costs are involved.
However, the downside is that a cheap super fund may not deliver the same level of service or investment options as a fund with higher fees.
To determine the quality of a super fund, know exactly what the fees are in your super and how the overall returns compare to others.