AustralianSuper has frozen the weekly $1.50 administration fee it charges members for the next three years, after boosting it by 50 per cent in 2009.
Ian Silk, chief executive of the $42 billion fund, says the fee freeze was made possible by the declining cost of its operations as the fund has grown.
“The unit cost of most areas of our operation has decreased as we got larger,” Silk says. “This is what gives us the confidence to lock in a $1.50 fee for three years.”
However the freeze does not apply to members in the fund’s Corporate and Pension divisions.
The administration fee covers all non-investment and group insurance expenses, such as member services, financial planning and marketing. In September 2008 the fund announced a 50 per cent increase to this fee, effective from January 1, 2009, to cover the increasing costs of its operations.
“We didn’t want the fee to creep up each year,” Silk says. “And we expected that we wouldn’t have to increase it for a period of time but weren’t sure how long that would be.”
Silk is confident that the fee freeze will be extended beyond 2014. He hopes news of the freeze will spur members of other funds to investigate the administration fees they pay.
According to SuperRatings, a superannuation research company, a 25-year old earning $50,000 each year with a balance of $10,000 will save $90,135 over the course of their working life by investing with AustralianSuper instead of an average retail super fund.
The analysis assumes both funds generate identical net investment returns and uses current dollar values.