SuperRatings analysed the fees and investment options listed in the public disclosure statements of over 65 MySuper products.
The analysis revealed that on an average $50,000 account balance, average fees for retail master trusts each year are now $490, only $25 higher than the not-for-profit average of $465.
SuperRatings stated the introduction of numerous low-cost products helped the average MySuper fee to fall 23 per cent to $469 on a $50,000 balance, compared to the average $608 fee recorded at June 2012.
SuperRatings head of consulting Adam Gee said this reduction in fees has mostly been driven by the increasing competitiveness of the retail master trust sector.
The lowest cost MySuper product for a $50,000 balance was ANZ Smart Choice Super with its fee at $300.
This was followed by First State Super MySuper Life Cycle at $332 and EISS MySuper at $335.
Mr Gee said while these cost reductions are a positive outcome for members, the focus needs to remain on the overall net benefit members receive – the combined impact of investment performance and fees.
“Members face greater risks if the fund’s investments are not meeting their objectives over the longer term, which could quickly balance out any perceived savings in fees,” said Mr Gee.
Investment management fees still account for the largest portion of total fees charged, with the average recorded at $329 compared to $69 for the administration fee and $71 for the member fee.
The average investment fee for not-for-profit funds was $325, while for retail funds it was $350.
In terms of investment structures, not-for-profit funds tend to offer traditional ‘balanced’-style options with 70 per cent of assets allocated to growth assets and 30 per cent to defensive assets.
Retail master trusts, on the other hand, have generally developed life stage default investment options.
These strategies automatically reduce a member’s allocation to growth assets as they age, lowering their portfolio risk as they approach retirement.
Most of these life stage investment products use age bands of five or 10 years.
The study found only nine per cent of not-for-profit funds use this strategy.
