Australia’s savers are losing $150 million in unnecessary fees every year to ‘Fat Cat Super Funds’ that aren’t performing as they should be, a new study reveals.
Around $7 billion is currently invested in 40 poorly-performing superannuation funds, and that means their members are losing $150 million in fees annually, the latest Fat Cat Super Fund report from investment platform Stockspot has found.
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The average ‘Fat Cut Fund’ charges around 2 per cent in fees every year, compared to the 1 per cent charged by ‘Fit Cat Funds’.
‘Fit Cat Funds’ also return 20 per cent more over five years than their ‘Fat’ counterparts.
“Superannuation is something that Australia should be proud of, yet these high fee ‘Fat Cat Funds’ continue to take advantage of thousands of Australians and their hard-earned money,” author of the report and Stockspot CEO, Chris Brycki said.
“One of our golden rules of superannuation is; the less you pay, the more you get. Always pay less than 1 per cent p.a. in fees so your super isn’t eroded by high fees,” he continued.
“I know 1 per cent doesn’t sound like a lot, but for the Aussies stuck in these ‘Fat Cat Funds’, they’ll be worse off by $200,000 or more compared to their friends who are in a low-fee fund.”
That means that by just switching from a high-fee charging fund to one that charges less than 1 per cent, Australian savers can save an extra $200,000 by retirement.
Stockspot arrived at that figure by using a 35-year-old man earning a salary of $78,192 with a super balance of $56,732 as an example, and comparing retirement outcomes for if he was with a fund charging 2.07 per cent in fees, and a fund charging 0.97 per cent.
What are the worst funds?
ANZ/OnePath and AMP make up more than half of all the worst ‘Fat Cat’ funds.
The average fee among the bottom
What are the best funds?
QSuper, UniSuper and Australian Super - which have 19 funds between them - all charge less than 1 per cent in fees annually.
I care the most about performance. Which funds perform well there?
These are the highest- and lowest-performing growth funds based on five-year returns.
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