It’s been over a decade since SuperRatings began publishing its annual list of Australia’s best super funds.
But its latest list, released yesterday, documented something the independent ratings agency has never seen before.
For the first time ever, average superannuation fees have fallen. On a $50,000 balance, the average super fund now charges $707 in fees, down from $722 last year.
SuperRatings chair and founder Jeff Bresnahan tells SmartCompany that while average fees have generally fallen as a percentage of superannuation balances over the years, for the past decade, they have continued to go up in dollar terms.
Until this year, that is.
“What’s happened is that the whole market is shifting because of the introduction of MySuper,” he says, referring to the ‘no frills’, low-fee government superannuation accreditation which only approved funds will be able to display. From January 2014, employers must by default offer their employees a MySuper accredited fund.
“This has caused, for the first time, a lowering of fees in dollar terms,” Bresnahan says.
“That’s what MySuper was supposed to do, so in that case it’s been successful. But the amount of good it does will ultimately be judged by whether or not it compromises returns.”
Over the past decades, there’s been a noticeable shift in superannuation funds having to compete far more vigorously with each other, he adds.
“There’s no natural growth left in the industry – it can only go down from here.”
The finding comes as SuperRatings releases its annual list of Australia’s best-rated superannuation funds, which reviews hundreds of funds across a range of factors.
The highest-rated fund for people in the accumulation phase was Telstra Super, while the best-rated funds for those in the retirement-pension phase were Russell Private Active Pension and Sunsuper pension (who were equal first).
The best fund overall was REST Industry Super.
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Three funds were in the top 10 for both the accumulation and retirement phase: Catholic Super, Australian Super, and HOSTPLUS.
The ratings are based on historical returns, as well as a number of other factors such as how the investment team is structured, the customer service offered by the fund, and the level of insurance.
“The critical thing with superannuation is there’s no point looking at just one metric,” Bresnahan says. “A cheap fund might offer low returns, for example. But as well as returns and fees, things like the safety of your money, the customer service, and the insurance coverage are really important.”
Best superannuation funds revealed
Ten funds for the accumulation phase, reviewed from a universe of some 300 products, in alphabetical order, were:
- Catholic Super
- First State Super
- HESTA Super
- REST Industry Super
- Telstra Super (highest rated)
The top 10 funds for the retirement/pension phase, reviewed from a universe of some 150 products, in alphabetical order, were:
- AUSCOAL Super
- Catholic Super
- Club Plus
- REST Allocated Pension
- Russell Private Active Pension (highest rated)
- Sunsuper Pension (highest rated)