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Australians are now paying a massive $32 billion a year in super fund fees

  • The fees paid by Australian to their super funds each year are rising.

  • Over the last year fees paid have increased by 10% to $32 billion, according to the data from Rainmaker Information.

  • The average superannuation fund member is paying 1.23% of their account balance in fees, up from 1.17% in 2017.

The latest numbers show Australians are still being hit by increasingly painful costs to have their retirement savings looked after.

The fees paid to superannuation funds have risen by 10% over the last year to $32 billion, according to data from Rainmaker Information.

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The average superannuation fund member is now paying 1.23% of their account balance in fees, up from 1.17% in 2017.

Almost two-thirds of the fees charged by superannuation funds go to investment management with the rest to administration.

Self managed super funds, with a balance of $500,000 or more, were found by Rainmaker to be the lowest cost with an average total expense ratio of 0.82%.

Here's how fees are split between investment and management:

The superannuation system is under pressure, being criticised in an investigation by the Productivity Commission and facing questioning at the financial services royal commission over the fees charged.

Australians are being bamboozled by superannuation, losing them billions every year in high fees, low returns and expensive insurance, according to the Productivity Commission.

Rainmaker says changes in fee disclosure makes it more important to understand what fees are for and what the fund offers.

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"These changes have dramatically changed the comparative sticker price fees across the market with retail funds offering many of the lowest price MySuper products available," says Alex Dunnin, Executive Director in Research and Compliance.

While the headline fee might be lower for some products it is useful to look at administration and investment components separately.

"Products offered by not for profit funds still have administration and member fees that are on average 50% cheaper than retail funds, but the fees for investment offsets this advantage," says Dunnin.

"However investment fees vary according to what investment option the member takes up. Many funds offer low cost index options as well as higher cost more active diversified options. Ultimately fees, particularly investment fees should be seen in light of net investment returns and risk."

The 2018 Rainmaker Fee Study analysed more than 2,500 fee options offered by 550 superannuation products representing 20 million member accounts.