Superannuation funds charge fees so they can afford to continue the management of the funds they administer on behalf of their members. All superannuation funds charge fees, there are none that don’t, although some funds may charge less than others and deliver a better result in the process. It is common for a low fee charging fund to grow your savings faster than a fund that charges a higher fee. There are various types of fees associated with all funds and they are normally deducted from your superannuation account at the finish of each month. They can be levied in either percentages or flat dollar amounts, depending on the particular fund’s policy. If you are unsure of the fees you are paying with your particular superannuation fund you will find them all listed in the fund’s product disclosure statement (PDS).

Some of the fees that are charged by various superannuation funds can include the following:

• When a fund charges a fee for administrative purposes it is known as a management fee. It can be broken down to; general administration; member account keeping; recovery of expenses, such as trustee out of pocket expenses; an insurer fee that covers the cost for providing product insurer services; investment management fees, the charging of this particular fee will depend on whatever investment options are involved.
• An advisor service fee, if you elicit the services of an advisor. Some fund members seek advice relating to their fund. When this is done you will have to pay an advisor service fee.
• If you switch investment, a switching fee. This type of fee is normally restricted to the occasions when you change investment options.
• Termination fee. Charged when you leave one superannuation fund in order to join up with another, some funds also include an exit fee.
• Some funds charge a fee on withdrawals. This withdrawal fee is charged to cover the costs of managing such withdrawals.
• Other funds charge a fee for making contributions. The contribution fee is charged each time you invest in the fund to cover adjustment costs.
• Establishment fee. A fee charged for setting your account up in the first instance.

Other costs can include such this as:

• Insurance premiums. The cost of issuing term life and disability insurance.
• Maintenance Costs. Any costs associated with real property and direct investments.
• Transaction expenses. The costs involved in contributing and withdrawing, even switching investments.

BT Super for Life

BT Super for Life products are restricted to just three fees although you should check with your BT product disclosure statement for any changes in policy:

1. Investment management fee of .99 percent on investment but nil on cash options.
2. Administration fee of $5 a month.
3. Spreads are charged for based on the buying and selling of units.

There are no other fees charged by BT on their Super for Life therefore you can expect a higher earning over the years, for instance the less fees you pay the more your retirement benefit will accumulate because superannuation is a long term investment. A difference of just one percent in fee costs over a 30 year term can be quite substantial.

What you need to ensure is that you are not paying fees unnecessarily. Many people have more than the one job over their working lifetime and in the process have picked up multiple superannuation policies. If this is the case with you, you will be paying fees on all these policies, therefore restricting their ultimate pay out figure. You should strive to consolidate all these policies into the one superannuation policy and therefore only pay the one lot of fees applicable to that policy. For example if you had a superannuation fund with a balance of $10,000 and your friend had a total of five funds with $2,000 in each one and you  both paid a five dollars a month administration fee.  You would find that in 30 years you would have accumulated a balance of $93,830 whereas your friend would have accumulated just $66,642 from his five funds which he kept intact. This shows a difference of $27,188 over a 30 year period.

Your Ultimate Aim – A Good Retirement

It is a long road on your way to retirement and it takes a long hard working life to get there. This is why you should put your hard work to good use by establishing a low fee superannuation fund as early as you can. The more time you give yourself to accumulate a reasonable retirement nest egg the wealthier you will be when you finally finish work. Superannuation is specifically designed to help ease you into retirement. All you need do is to determine how much money you feel you will need when you retire taking note of how much you currently earn and how much you can afford to invest. If you can afford to you may want to increase your contributions in order to gain a greater amount when you finally stop work.

On the other hand you might not want to retire too early and prefer to slow down gradually. You can  arrange your superannuation to fit into your life plan you have set for yourself. In these cases you will need to find out when you can access your superannuation and how you can use it in the early stages to supplement your income as you slow down in your work. It can be a great time in your life if you elicit the services of a financial advisor to help you make the right decisions.