For people considering switching super fund providers I just wanted to highlight some upcoming changes to fees.
For people using or considering AustralianSuper Member Direct to invest in ETFs or term deposits the annual fee is rising to $395. As I recently mentioned they have improved the ETF offerings and have some new features. However this seems far too much to pay for a relatively restricted product (with a maximum of 20% in any one ETF). Hopefully other providers will stay closer to the $180 p.a. mark but let me know if your provider is following AustralianSuper's lead.
SunSuper (who I have my superannuation with) are increasing their administration fee by 0.04% p.a. (gross of tax) to 0.1% p.a. However I don't think this will end up being bad news. They've recently entered into an agreement with Vanguard to provide them with passive investments. We should see some impact of this around mid-June with their updated investment guide but I expect this will mean lower investment management fees over time. A first indication is a change in name for their international shares funds from "Enhanced Index" to "Index". I'll keep you posted as details emerge but expect we'll finally have an inexpensive way to invest in the low-cost Vanguard Australia wholesale funds in our super.
Finally, if you are considering switching providers, a reminder to check insurance costs and ensure you are covered before closing your old super account (the conditions of insurance approval vary between super funds so be sure to check). If you use the Life and TPD insurance in Super a number of funds have had to pass on increasing insurance costs recently. If you have a low balance this can make a bigger difference than small changes in investment or administration costs. It is still often cheaper than insurance outside super so make sure you do the comparison before you switch.
Links:
AustralianSuper Member Direct Guide
SunSuper enters strategic alliance with Vanguard
Hi Super Freak,
ReplyDeleteThanks for continuing your post in this blog, it is a great resource!
Just wondering how you think the SunSuper and Vanguard partnership has worked out? I'm currently working with a financial adviser to sort out my super (and other matters), and they are recommending a wrap account with Vanguard funds through a private fund. I am not wild about in terms of cost. It seems that I could get the same deal with SunSuper at a better price?
Also, do you hold insurance with SunSuper? Are you happy with it for your situation?
Hi Ben,
DeleteI couldn't find specific confirmation on the website on whether SunSuper's index choices are now entirely with Vanguard or transitioning over time. But I'm personally very happy with SunSuper's International Index funds, and they are the lowest-cost for my situation that I've found so far. As I suspected, the investment management fee on their International Index funds has fallen to offset the higher admin cost I wrote about.
However I don't use SunSuper for insurance so, depending on one's insurance needs and balance size, that may impact the overall cost calculation. And remember to make sure any new insurance has been approved before cancelling/closing down your old super account!
Why not use a SMSF with say ESuper or SuperPlus to invest?
ReplyDeleteHi Barry,
DeleteThe main reason is cost. Until I have a larger balance, spending typically at least $1,000 p.a. on the platform and ASIC fees is relatively expensive and detracts from my overall returns.
With a large balance (or quickly growing towards a large balance due to contributions) it may at some stage make sense. But even then, since I invest primarily in broad index products, I'm unlikely to need more investment flexibility than I can already get from an industry or retail fund, so I'm unwilling to pay a higher cost and face a higher compliance burden.