Watch Out for the (Not So) Super Ratings: How Super Comparison Tables Lie to You
Sunday afternoon money-geek confessions: why popular superannuation rating tables might be lying to you depending on your account balance.
I’ve been perusing Superratings' top 10 funds as you do on a Sunday afternoon (yep, I’m a money geek). In this quick SuperRatings review, I'll show you why the default results they provide are at best a little simplistic, and at worst, completely misleading.
My problem is that these comparison tables usually only compare the fees that would be charged on a static superannuation balance of $50,000. What if you don’t have 50 big ones in your super account? Or what if you have a lot more? In short, an ANZ Smart Choice Super review might show that it isn't the smartest choice for you after all!
When looking at superannuation fees in Australia, you have to realise they comprise both a fixed cost AND a percentage cost. This means the actual fees you pay depend entirely on the balance in YOUR account.
Here’s the top 10 funds with the lowest fees (for a 50k balance) taken from the superratings website. They promote these as the route to finding the best super fund in Australia.
Now let's see what happens when I look at how to compare super funds properly by jiggling the balance a bit. I’ll take three of the funds: ANZ Smart Choice Super, Bendigo MySuper, and ING DIRECT Super:
| Balance Per Year | ANZ Smart Choice Super | Bendigo MySuper | ING DIRECT Super |
|---|---|---|---|
| $5,000 | $75 | $98 | $37.50 |
| $50,000 | $300 | $313 | $375 |
| $500,000 | $2,550 | $2,248 | $3,750 |
As you can see, if you only have $5,000 in super, then ING DIRECT Super ($37.50) actually costs half of what ANZ Smart Choice Super ($75) costs. If you’re lucky enough to have 500,000 smackers in super, then the fees on ANZ Smart Choice Super actually end up costing you about $300 more a year than Bendigo MySuper.
Here’s the breakdown of the fixed and percentage fees these super funds charge:
| Fee Type | ANZ Smart Choice Super | Bendigo MySuper | ING DIRECT Super |
|---|---|---|---|
| Member Fee ($ per year) | $50 | $98 | NA |
| Admin Fee (% per year) | NA | NA | 0.5% |
| Investment Fee (% per year) | 0.5% | 0.43% | 0.25% |
So just be careful with these comparison tables. They are a little too simplistic for my liking and could end up costing you serious cash… you might indeed be surprised at how much you're leaking.
Be also aware that this SuperRatings data is used by other comparison websites such as http://www.findmybestsuper.com.au.
As always, don't get ripped off, people! :-)
