Superannuation: the forgotten investment!
Published on January 25, 2016 1:17 pm, by Jen Bakker
In Australia nearly a third (30.3%) of people aged 18 to 64 consider retirement too far away to plan for (according to Roy Morgan research).
Not planning and engaging with your super may contribute to less-than-optimum superannuation in retirement. Even when retirement feels like forever away it’s important to remember that fees have a huge impact on retirement balances after 50 years (give or take) of investing.
The best way to know if the fees you’re paying are reasonable is to understand each of them. Once you know what they are and why they are charged you can take a look at other Superannuation providers and compare what you’re paying to what other providers charge.
Most common types of fees include –
- Member fees, these are general administration fees that cover the cost of having your super account.
- Management fees or Investment Management Fees (MER) these are fees to managing your investments. These can vary for the different investment options within your funds.
- Contribution fees these cover the administration costs of receiving and investing your superannuation contributions.
- Adviser service fees these can be for personal advice provided about your superannuation and other investments. This may also include commission paid to your adviser for certain investments they have recommended for you.
- Insurance premiums charged for any insurance that is provided through your superannuation funds. Often this is a default option and can be varied by you if you wish to lower or increase the level of cover you have.
Other fees that can be charged are –
- Establishment fee charged for the administration of setting up a new account in the funds
- Withdrawal or termination fees may be charged when you take funds out of your account upon retirement or when you rollover to another fund.
- Investment switching fees if you change investment options in your superannuation account
- Contribution splitting fees are charged when you split off some of your contributions in to your spouse’s super account.
- Performance fees that may be charged if your investments perform above market benchmarks.
- Issuer fees charged by the investment issuer for overseeing the fund.
- Expense recovery fees these are out of pocket expenses that your trustee is entitled to recover from your super account
- Family law split fee charged to split your super when given an order by the family law court.
Aussie company Stockspot has done some research and produced this easy to use report Fat Cat Super. Check out how your super fund stacks up!
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