Not so Super: Millennials could be losing 27% of retirement savings to fees
Millennials could be losing more than a quarter of their super balance to fees if they haven’t chosen their super fund correctly, revealed the 2017 Stockspot Fat Cat Funds report.
The report reviews over 4,000 super funds’ performance, and uncovered an “undeniable link between high-fees and poor long-term performance.”
According to the report, these underperforming super funds currently manage $45.59 billion of Australians’ money - over $600 million of which goes towards steep fees, cutting into the retirement savings of Aussies.
For millennials, this could mean losing an average of $311,733 or 27% of their super return to fees if they leave their retirement funds in the hands of what the report terms “Fat Cat Funds” - underperforming super funds that charge an average 1.99% p.a. in fees.
Those entrusting their savings to one of the top performing funds, however, paid fees at an average rate of 1.16% - just 8% of their return.
“This is the fifth year we’ve done this report, it’s incredible that the worst offenders, the banks, still drag their feet on helping customers avoid high super fund fees. There are 521 Fat Cat Funds and two thirds (67%) are managed by the big banks,” said Chris Brycki, founder and CEO of Stockspot.
“The banks stopped ATM fees, the next unfair fees to come under the chop should be Fat Cat Funds.”
“Too many Australians don’t know how much they pay in super fees and how that damages long-term savings and retirement living standards,” said Brycki.
“Simply switching out of a fund charging 1.99% to one charging 0.5%, all things equal, a male millennial could boost their super balance by $355,957 and a female by $306,291.”
For those considering a Self-managed Super Fund to grow your retirement savings, take a look the winners of Mozo’s Expert Choice Awards for SMSF Savings Accounts and Term Deposits.Saving Accounts
- RaboDirect - DIY Super High Interest Savings Account
- ME - Business Online Savings Account
- CUA - eSaver Reward
See the other SMSF Savings Account winners here.Term deposits
- ME - Business Term Deposit
- RaboDirect - Term Deposit
- Big Sky - SMSF Term Deposit
Check out the other SMSF Term Deposit winners here.