Yahoo Finance You’re losing $351 every year, and this is how it’s happening
If someone told you a one-litre bottle of milk was $2.25 at Coles and $2.15 at Woolworths, you’d probably head to Woolies.
So why aren’t we just as discerning when it comes to picking finance products – when it comes to our money itself?
New research commissioned by the Australian Institute of Superannuation Trustees (AIST) compared two similar superannuation products and their fees, and the results show how we could be losing out on hundreds of dollars a year when we pick the wrong product.
Let’s take a high-growth investment option with a $50,000 account balance.
When two products of this type is compared side by side – one from a not-for-profit super fund and another by a retail super fund – the difference in fees paid becomes clear.
Individuals with an industry fund pay $591 in annual fees – but those with a retail fund have to fork up $942.
That’s a $351 a year that could be spent elsewhere.
Let’s say you have a balanced option, with a modest $5,000 in your account.
Younger Aussies new to the workforce, or those working less than full-time hours, might fall into this bracket.
Though the difference is less stark, you’ll still be paying more in fees as a member of a retail fund ($165.50 per year) than you would if you were with an industry fund ($124).
‘Unacceptable’
AIST CEO Eva Scheerlinck said it was difficult for funds to justify the high fees in the post-banking Royal Commission environment.
“Many members are paying almost double the fees for less returns on their retirement savings,” she said.
She said the difference in fees highlighted the need for a tool that could help super members easily compare similar products.
“Currently, it is almost impossible for members of Choice funds to compare the fees and charges of their super fund. In the 21st century, this shouldn’t be that hard,” she said.
“People in low performing funds will be losing out on their superannuation and they won’t even know it. This is unacceptable.”
AIST is a member organisation that supports and advocates for profit-to-member, government and corporate superannuation funds.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, property and tech news.
